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                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
        SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                       COLLABORATION AND LICENSE AGREEMENT
                                 BY AND BETWEEN
                                MERCK & CO., INC.
                                       AND
                          ALNYLAM PHARMACEUTICALS, INC.


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                       COLLABORATION AND LICENSE AGREEMENT

      THIS AGREEMENT, effective as of June 29, 2004 (the "EFFECTIVE DATE"), by
and between MERCK & CO., INC., a corporation organized and existing under the
laws of New Jersey ("MERCK"), and ALNYLAM Pharmaceuticals, Inc., a corporation
organized and existing under the laws of Delaware ("ALNYLAM").

                                    RECITALS:

      WHEREAS, ALNYLAM has developed technology useful for the discovery,
development, manufacture, characterization, or use of therapeutic products that
function through RNA interference ("RNAI"), and is developing capabilities to
develop and commercialize such therapeutic products;

      WHEREAS, MERCK is engaged in the business of discovering, developing,
manufacturing and commercializing human therapeutic products, including
therapeutic products for ophthalmic indications;

      WHEREAS, MERCK and ALNYLAM desire to enter into a collaboration to
research, develop and commercialize RNAi Products (as hereinafter defined) for
the treatment of Ocular Microvascular Disease (as hereinafter defined) in humans
upon the terms and conditions set forth herein;

      NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:

1.    DEFINITIONS

      Unless specifically set forth to the contrary herein, the following terms,
      whether used in the singular or plural, shall have the respective meanings
      set forth below:

      1.1   "ADDITIONAL PROGRAM TARGET" means (a) a genomic locus other than
            VEGF, (b) any portions of such locus, (c) all transcript variants
            and allelic variants of such locus, (d) any RNA transcribed from
            within or overlapping such locus and (e) any proteins encoded by any
            such RNA transcripts; any of which is the target of an Ophthalmic
            Product that the Parties mutually agree to develop in an Additional
            Program pursuant to Section 2.4.

      1.2   "AFFILIATE" means, with respect to a Party, (i) any corporation or
            business entity of which fifty percent (50%) or more of the
            securities or other ownership interests representing the equity, the
            voting stock or general partnership interest are owned, controlled
            or held, directly or indirectly, by such Party; (ii) any corporation
            or business entity, which, directly or indirectly, owns, controls or
            holds fifty percent (50%) (or the maximum ownership interest
            permitted by law) or more of the securities or other ownership
            interests representing the equity, the voting stock or, if
            applicable, the general partnership interest, of such Party; or
            (iii) any corporation or business entity, fifty percent (50%) or
            more of the securities or other ownership interests representing the
            equity of which is directly or indirectly owned, controlled or held
            by the same corporation, business entity or security holders, or
            holders of ownership interests, that


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            own, control or hold fifty percent (50%) or more of the securities
            or other ownership interests representing the equity or the voting
            stock of such Party.

      1.3   "ALNYLAM COLLABORATION IP" means (a) any improvement, discovery or
            Know-How, patentable or otherwise, first identified, discovered or
            developed solely by employees of ALNYLAM or its Affiliates or other
            persons not employed by MERCK acting on behalf of ALNYLAM, under the
            Ophthalmic Collaboration, and (b) any Patent Rights in the Territory
            which claim, cover or relate to such improvements, discoveries or
            Know-How and are Controlled by ALNYLAM at any time during the
            Agreement Term. ALNYLAM Collaboration IP excludes ALNYLAM's interest
            in Joint Collaboration IP.

      1.4   "ALNYLAM IN-LICENSE" means an agreement between ALNYLAM and a Third
            Party pursuant to which ALNYLAM has rights and obligations with
            respect to, or which otherwise Cover, an Ophthalmic Product and
            which is necessary to Develop, Commercialize and/or Manufacture
            Ophthalmic Products in the Field in the Territory, including without
            limitation the Existing ALNYLAM In-Licenses.

      1.5   "ALNYLAM KNOW-HOW" means Know-How that is either (a) Controlled by
            ALNYLAM on the Effective Date, or (b) comes within ALNYLAM's Control
            during the Agreement Term (other than ALNYLAM's rights in Joint
            Collaboration IP and ALNYLAM Collaboration IP).

      1.6   "ALNYLAM PATENT RIGHTS" means Patent Rights that (a) claim (i)
            ALNYLAM Know-How, or (ii) the identification, characterization,
            optimization, construction, expression, use or production of an
            Ophthalmic Product to a Program Target, and which ALNYLAM reasonably
            determines to be useful or necessary to Develop, Commercialize
            and/or Manufacture Ophthalmic Products in the Field in the
            Territory, and (b) are Controlled by ALNYLAM at any time during the
            Agreement Term. As of the Effective Date, ALNYLAM Patent Rights
            include without limitation those listed on Schedule 1.6. ALNYLAM
            Patent Rights shall not include Patent Rights included in ALNYLAM
            Collaboration IP.

      1.7   "ALNYLAM TECHNOLOGY" means, collectively, ALNYLAM Know-How, ALNYLAM
            Patent Rights, ALNYLAM Collaboration IP and ALNYLAM's interest in
            Joint Collaboration IP.

      1.8   "BROAD RNAI TECHNOLOGY" means RNAi Technology arising from or
            necessary for the performance of the Program Workplan which [**].

      1.9   "BROAD RNAI TECHNOLOGY COLLABORATION IP" means Joint Collaboration
            IP that constitutes Broad RNAi Technology.

      1.10  "CALENDAR QUARTER" means the respective periods of three (3)
            consecutive calendar months ending on March 31, June 30, September
            30 and December 31.

      1.11  "CALENDAR YEAR" means each successive period of twelve (12) months
            commencing on January 1 and ending on December 31.


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      1.12  "CLINICAL STUDY" means a Phase I Study, Phase II Study, Phase III
            Study or Post-Approval Study, as applicable.

      1.13  "COMBINATION PRODUCT" means an Ophthalmic Product combined with any
            other clinically active therapeutic, prophylactic or diagnostic
            ingredient. All references to Ophthalmic Product in this Agreement
            shall be deemed to include Combination Product, to the extent
            applicable.

      1.14  "COMMERCIALIZATION" or "COMMERCIALIZE" means any and all activities
            directed to marketing, promoting, distributing, importing and
            selling a product, including the conduct of Post-Approval Studies,
            and activities directed to obtaining pricing and reimbursement
            approvals, as applicable.

      1.15  "COMMERCIALIZATION EXPENSES" means, with respect to each
            Profit-Sharing Product, the following costs and expenses to the
            extent incurred by the Parties and/or their Related Parties in the
            Commercialization and Manufacturing of such Profit-Sharing Product
            in or for the United States:

            (a)   Cost of Goods Sold;

            (b)   Manufacturing Development Expenses incurred after the First
                  Commercial Sale of such Profit-Sharing Product in the United
                  States;

            (c)   Distribution Expenses;

            (d)   Sales and Marketing Expenses;

            (e)   Losses arising out of Third Party product liability claims as
                  set forth in Section 10.5.3(c)(iii); and

            (f)   payments to Third Parties under In-Licenses of Necessary Third
                  Party IP pursuant to Section 8.3.6.1(b).

      1.16  "COMMERCIALIZATION PLAN" means the multi-year business plan and
            annual profit plan relating to each Profit-Sharing Product that is
            mutually agreed between the Parties pursuant to Section 5.4.

      1.17  "COMMERCIALLY REASONABLE EFFORTS" means the carrying out of
            obligations in a diligent and sustained manner using such effort and
            employing such resources as would normally be exerted or employed by
            a similarly situated biopharmaceutical company for a product of
            similar market potential at a similar stage of its product life.

      1.18  "COMPLETION OF PHASE I" means, with respect to an Ophthalmic
            Product, the completion of data analysis for those Phase I Studies
            of such Ophthalmic Product that the Parties prospectively identify
            in the applicable Program Workplan as the studies the data from
            which would provide a sufficient basis to Initiate a Phase II Study.


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      1.19  "COMPLETION OF PHASE II" means, with respect to an Ophthalmic
            Product, the completion of data analysis for those Phase II Studies
            of such Ophthalmic Product that the Parties prospectively identify
            in the applicable Program Workplan as the studies the data from
            which would provide a sufficient basis to Initiate a Phase III
            Study.

      1.20  "CONTROL", "CONTROLS" OR "CONTROLLED BY" means, with respect to any
            (a) material, know-how or other information or (b) intellectual
            property right, the possession of (whether by ownership or license,
            other than pursuant to this Agreement), or the ability of a Party or
            its Affiliates to grant access to, or a license or sublicense of,
            such item or right as provided for herein without violating the
            terms of any agreement or other arrangement with any Third Party
            existing at the time such Party would be required hereunder to grant
            the other Party such access or license or sublicense.

      1.21  "COST OF GOODS SOLD" means, with respect to an Ophthalmic Product,
            the reasonable internal and external costs of a Party incurred in
            Manufacturing such Ophthalmic Product (including[**]to the extent
            that such costs are reasonably allocated to the Manufacture of such
            Ophthalmic Product, and [**]), including: (a) to the extent that
            such Ophthalmic Product is sourced from a Party, fully allocated
            cost of Manufacture of such Ophthalmic Product, consisting of [**]
            (such reasonable allocation shall [**] to be provided for such
            Ophthalmic Product, but excluding [**]), all calculated in
            accordance with generally accepted accounting principles in the
            United States consistently applied by the applicable Party, [**],
            and (b) to the extent that such Ophthalmic Product is sourced from a
            Third Party manufacturer, the actual price paid by a Party to the
            Third Party for the Manufacture, supply and packaging of such
            Ophthalmic Product plus any additional reasonable costs incurred by
            the Party relating to managing the Third Party relationship. Cost of
            Goods Sold shall not include royalties paid to Third Parties. [**]
            the Cost of Goods Sold charged by the Manufacturing Party for such
            Ophthalmic Product [**] that a Third Party manufacturer, or an
            alternative Third Party manufacturer, [**] such Ophthalmic Product
            [**] Cost of Goods Sold, then the Parties [**] the non-Manufacturing
            Party's [**] and the non-Manufacturing Party shall [**] by the JSC
            or JCC, as the case may be. The non-Manufacturing Party's [**] the
            Cost of Goods [**] shall be [**]; provided, however, that the
            non-Manufacturing Party may [**] in the event that the Manufacturing
            Party [**] Cost of Goods Sold for an Ophthalmic Product that is
            [**]for the equivalent period. If the JSC or JCC [**] shall provide
            the non-Manufacturing Party [**].

      1.22  "CO-PROMOTION" means the joint promotion of an Ophthalmic Product by
            both Parties and/or their respective Affiliates under the same
            product trademark(s). "CO-PROMOTE" when used as a verb shall mean to
            engage in such Co-Promotion.

      1.23  "COUNTRY SALES" means the Net Sales of a Royalty-Bearing Product in
            a Calendar Year by a Party or its Related Parties in a particular
            country, converted into United States dollars as set forth in
            Section 8.5.

      1.24  "COVER," "COVERING" OR "COVERS" means, with respect to an Ophthalmic
            Product, that in the absence of a license granted under a Valid
            Claim, the Development, Manufacture


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            or Commercialization of the Ophthalmic Product would or is
            reasonably likely to infringe such Valid Claim.

      1.25  "DETAIL" OR "DETAILING" means a product presentation in a
            face-to-face meeting in an individual or group practice setting
            between a professional sales representative and a targeted
            prescriber in which one or more key benefits of the Profit-Sharing
            Product are verbally presented in a balanced manner.

      1.26  "DEVELOPMENT," "DEVELOPING" or "DEVELOP" means the research and
            development activities related to the generation, characterization,
            optimization, construction, expression, use and production of
            Ophthalmic Products directed to any Program Target, any other
            research and development activities related to the clinical testing
            and qualification of Ophthalmic Products for clinical testing, and
            such other tests, studies and activities as may be required or
            recommended from time to time by the JSC or any Regulatory Authority
            to obtain Regulatory Approval of an Ophthalmic Product, including
            toxicology studies, statistical analysis and report writing,
            pre-clinical testing, clinical studies and regulatory affairs,
            product approval and registration activities.

      1.27  "DEVELOPMENT EXPENSES" means, with respect to each Program Workplan,
            the internal and external costs and expenses incurred by the Parties
            and/or their Related Parties in the Development of Ophthalmic
            Products, in accordance with such Program Workplan and the related
            budget for Development Expenses, including without limitation:

            (a)   all costs as set forth in the applicable Program Workplan that
                  are incurred in connection with the generation,
                  characterization and optimization of Ophthalmic Products
                  directed to the Program Target, and the subsequent
                  pre-clinical and clinical Development of such Ophthalmic
                  Products;

            (b)   all Development-related out-of-pocket costs and expenses as
                  set forth in the applicable Program Workplan that are
                  incurred, including without limitation payments to
                  investigators, contract research organizations (CROs), other
                  Third Party Development service providers and other contract
                  labor services relating to Development activities,
                  institutional study expenses, investigator meeting expenses,
                  central laboratory expenses, data management, statistical
                  designs and studies, and document preparation;

            (c)   fees incurred in connection with filings relating to
                  Regulatory Approvals;

            (d)   Cost of Goods Sold of Ophthalmic Product used in Development
                  activities, the costs and expenses incurred to purchase and/or
                  package comparator or combination drugs or devices, and costs
                  and expenses of disposal of clinical supplies;

            (e)   Manufacturing Development Expenses incurred with respect to an
                  Ophthalmic Product prior to the First Commercial Sale of such
                  Ophthalmic Product in the United States;


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            (f)   the costs of internal scientific, medical, technical or
                  managerial personnel engaged in such efforts, which costs
                  shall be determined based on the FTE Costs, unless another
                  basis is otherwise agreed by the Parties in writing;

            (g)   payments to Third Parties [**]pursuant to [**]

            (h)   Losses arising out of Third Party product liability claims as
                  set forth in Section 10.5.3(c)(ii);

            (i)   Patent Expenses as set forth in Section 11.3.7 and costs of
                  infringement suits as set forth in Section 11.4.4; and

            (j)   any other costs explicitly included in the budgets included in
                  the Program Workplan.

      1.28  "DEVELOPMENT MATERIALS" means animal models, cell lines, tissue
            samples, genes, plasmids, siRNAs, constructs, vectors, receptors and
            other proteins, peptides, and other biological materials related to
            Ophthalmic Products or Program Targets that in each case are used in
            or that may be necessary or useful to conduct the Programs.

      1.29  "DISTRIBUTION EXPENSES" means, with respect to a Profit-Sharing
            Product, the expenses incurred by MERCK and its Related Parties in
            the distribution of such Profit-Sharing Product in the United
            States, calculated as [**]. The Parties will agree upon [**].

      1.30  "EXISTING ALNYLAM IN-LICENSES" means the Third Party agreements
            listed on Schedule 1.30, as such schedule may be amended pursuant to
            Sections 2.15 or 7.5.

      1.31  "FDA" means the United States Food and Drug Administration and any
            successor governmental authority having substantially the same
            function.

      1.32  "FIELD" shall mean the treatment, prophylaxis and diagnosis of
            Ocular Microvascular Disease in humans with RNAi Products.

      1.33  "FIRST COMMERCIAL SALE" means, with respect to any Ophthalmic
            Product, the first sale for end use or consumption of such
            Ophthalmic Product in a country after all required Regulatory
            Approvals have been granted by the Regulatory Authority of such
            country. For the avoidance of doubt, sales for clinical study
            purposes or compassionate, named patient or similar use, shall not
            constitute a First Commercial Sale.

      1.34  "FTE" means a full time equivalent person year (based on
            consistently applied practices of the applicable party) of
            scientific, medical, technical, quality control, quality assurance,
            or managerial work performed by or on behalf of a Party on or
            directly related to the Ophthalmic Collaboration.

      1.35  "FTE COSTS" means the amount determined by multiplying the number of
            FTEs allocated by a Party during the relevant time period, subject
            to any limitations set forth in the applicable Program Workplan or
            otherwise established by the JSC, times the FTE Rate. "FTE RATE"
            means initially $[**] per FTE, which amount shall be increased or


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            decreased on an annual basis as mutually agreed by the Parties, but
            in no event more than [**] percent ([**]%) per Calendar Year.

      1.36  "HEALTH SCIENCE ASSOCIATE" means an individual employed by a Party
            who is responsible for providing scientific and medical information
            to healthcare professionals regarding an Ophthalmic Product. Health
            Science Associates do not engage in Detailing or other promotional
            efforts.

      1.37  "IND" means an Investigational New Drug application, Clinical Study
            Application, Clinical Trial Exemption, or similar application or
            submission for approval to conduct human clinical investigations
            filed with or submitted to a Regulatory Authority in conformance
            with the requirements of such Regulatory Authority.

      1.38  "IND-ENABLING GLP TOXICOLOGY STUDIES" means genotoxicity, acute
            toxicology, safety pharmacology, and sub-chronic toxicology studies
            in species that satisfy applicable regulatory requirements using
            applicable good laboratory practices which meet the standard
            necessary for submission as part of an IND filing with a Regulatory
            Authority.

      1.39  "INFORMATION" means any and all information and data, including
            without limitation all ALNYLAM Technology and MERCK Technology, and
            all other scientific, pre-clinical, clinical, regulatory,
            manufacturing, marketing, financial and commercial information or
            data, whether communicated in writing or orally or by any other
            method, which is provided by one Party to the other Party in
            connection with this Agreement.

      1.40  "INITIATE", "INITIATED" or "INITIATION" means, with respect to a
            Clinical Study, the administration of the first dose to a subject in
            such Clinical Study.

      1.41  "IN-LICENSES" means collectively, the ALNYLAM In-Licenses and the
            MERCK In-Licenses.

      1.42  "JOINT COLLABORATION IP" means, collectively, (a) any improvement,
            discovery or Know-How, patentable or otherwise, first identified,
            discovered or developed jointly by the Parties or their Affiliates
            or others acting on behalf of MERCK and ALNYLAM under the Ophthalmic
            Collaboration, and (b) any Patent Rights in the Territory which
            claim, cover or relate to such improvements, discoveries or
            Know-How.

      1.43  "JOINT STEERING COMMITTEE" or "JSC" means the joint steering
            committee as more fully described in Section 3.1.

      1.44  "KNOW-HOW" means, with respect to each Ophthalmic Product, all
            biological materials and other tangible materials, inventions,
            practices, methods, protocols, formulas, knowledge, know-how, trade
            secrets, processes, assays, skills, experience, techniques and
            results of experimentation and testing, including without limitation
            pharmacological, toxicological and pre-clinical and clinical test
            data and analytical and quality control data, patentable or
            otherwise, which relates to the identification, characterization,
            optimization, construction, expression, use or production of an

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            Ophthalmic Product and which is reasonably useful or necessary to
            Develop, Manufacture or Commercialize such Ophthalmic Product in the
            Territory in the Field.

      1.45  "MANUFACTURING" or "MANUFACTURE" means, as applicable, all
            activities associated with the production, manufacture, processing,
            filling, finishing, packaging, labeling, shipping, and storage of
            Ophthalmic Products, including process and formulation development,
            process validation, stability testing, manufacturing scale-up,
            pre-clinical, clinical and commercial manufacture and analytical
            development, product characterization, quality assurance and quality
            control, whether such activities are conducted by (i) ALNYLAM, its
            Affiliates or a Third Party contractor of ALNYLAM, or (ii) MERCK,
            its Affiliates or a Third Party contractor of MERCK.

      1.46  "MANUFACTURING DEVELOPMENT EXPENSES" means, with respect to an
            Ophthalmic Product, to the extent not included in Development
            Expenses or Cost of Goods Sold, the [**]. Manufacturing Development
            Expenses shall be determined by a Party in accordance with generally
            accepted accounting principles in the United States consistently
            applied by such Party.

      1.47  "MERCK COLLABORATION IP" means (a) any improvement, discovery or
            Know-How, patentable or otherwise, first identified, discovered or
            developed solely by employees of MERCK or its Affiliates or other
            persons not employed by ALNYLAM acting on behalf of MERCK, under the
            Ophthalmic Collaboration, and (b) any Patent Rights in the Territory
            which claim, cover or relate to such improvements, discoveries or
            Know-How and are Controlled by MERCK at any time during the
            Agreement Term. MERCK Collaboration IP excludes MERCK's interest in
            Joint Collaboration IP.

      1.48  "MERCK IN-LICENSE" means an agreement between MERCK and a Third
            Party pursuant to which MERCK has rights and obligations with
            respect to, or which otherwise Cover, an Ophthalmic Product and is
            necessary to Develop, Commercialize and/or Manufacture Ophthalmic
            Products in the Field in the Territory.

      1.49  "MERCK KNOW-HOW" means Know-How that is either (a) Controlled by
            MERCK on the Effective Date, or (b) comes within MERCK's Control
            during the Agreement Term (other than MERCK's rights in Joint
            Collaboration IP and MERCK Collaboration IP).

      1.50  "MERCK PATENT RIGHTS" means Patent Rights that (a) claim (i) MERCK
            Know-How, or (ii) the identification, characterization,
            optimization, construction, expression, use or production of an
            Ophthalmic Product to a Program Target, and which MERCK reasonably
            determines to be useful or necessary to Develop, Commercialize
            and/or Manufacture Ophthalmic Products in the Field in the
            Territory, and (b) are Controlled by MERCK at any time during the
            Agreement Term. MERCK Patent Rights shall not include Patent Rights
            included in MERCK Collaboration IP.

      1.51  "MERCK TECHNOLOGY" means, collectively, MERCK Know-How, MERCK Patent
            Rights, MERCK Collaboration IP and MERCK's interest in Joint
            Collaboration IP.

      1.52  "NDA" means a New Drug Application, Biologics License Application,
            Worldwide Marketing Application, Marketing Authorization
            Application, Section 510(k) filing or


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            similar application or submission filed with a Regulatory Authority
            in a country or group of countries to obtain marketing approval for
            a biological, pharmaceutical or other therapeutic, prophylactic or
            diagnostic product in that country or in that group of countries.

      1.53  "NDA FILING" means, with respect to an Ophthalmic Product, the
            acceptance by a Regulatory Authority of an NDA for such Ophthalmic
            Product for filing.

      1.54  "NECESSARY THIRD PARTY IP" means, with respect to any country in the
            Territory, on a country-by-country basis, Know-How or Patent Rights
            in such country owned or controlled by a Third Party that Cover an
            Ophthalmic Product.

      1.55  "NET SALES" means, with respect to an Ophthalmic Product, the
            aggregate gross invoice prices of all units of such Ophthalmic
            Product sold by MERCK or its Related Parties or by ALNYLAM or its
            Related Parties to Third Parties (other than a Sublicensee of a
            Party) after deducting, if not previously deducted, from the amount
            invoiced or received:

            (a)   trade and quantity discounts actually given other than early
                  pay cash discounts;

            (b)   returns, rebates, chargebacks and other allowances actually
                  given;

            (c)   retroactive price reductions that are actually granted; and

            (d)   a fixed amount equal to [**] to cover bad debt, sales or
                  excise taxes, early payment cash discounts, transportation and
                  insurance, custom duties, and other governmental charges.

            With respect to sales of Combination Products, Net Sales shall be
            calculated on the basis of the gross invoice price of the Ophthalmic
            Product(s) containing the same composition and concentration of RNAi
            Product sold without other clinically active ingredients.

            In the event that the Ophthalmic Product is sold only as a
            Combination Product and not sold without other clinically active
            ingredients, the Parties shall negotiate in good faith another basis
            on which to calculate Net Sales with respect to the Combination
            Product that fairly reflects the value of the Ophthalmic Product
            relative to the other clinically active ingredients in the
            Combination Product, but in no event shall such calculation result
            in the gross invoice price on which Net Sales are based being [**]of
            the gross invoice price of such Combination Product.

            A percentage of the deductions set forth in paragraphs (a) through
            (d) above equal to the ratio of the Net Sales for the Ophthalmic
            Product to the Net Sales of the entire Combination Product will be
            applied in calculating Net Sales for a Combination Product.


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      1.56  "OCULAR MICROVASCULAR DISEASE" means age-related macular
            degeneration and [**], including without limitation [**], including
            without limitation [**]; but specifically excluding [**], such as
            (by way of example only) [**].

      1.57  "OPHTHALMIC COLLABORATION" means the collaboration of the Parties in
            the Development, Manufacture and Commercialization of Profit-Sharing
            Products, and shall include, without limitation, the Pre-Clinical
            Development Collaboration.

      1.58  "OPHTHALMIC PRODUCT" means an RNAi Product which is directed at a
            Program Target, that is (a) contributed by a Party to a Program in
            the Ophthalmic Collaboration, including without limitation, the
            Ophthalmic Product(s) identified on Schedule 2.3, or (b) discovered,
            derived or developed by a Party or any person or entity acting on
            behalf of a Party, including Affiliates, consultants and scientific
            advisors thereof, in the course of the Ophthalmic Collaboration,
            including, without limitation, any Combination Product,
            Profit-Sharing Product and/or Royalty-Bearing Product.

      1.59  "OPT-OUT RIGHTS" means, collectively, Target Opt-Out Rights and
            Product Opt-Out Rights.

      1.60  "PARTY" means MERCK and/or ALNYLAM.

      1.61  "PATENT RIGHTS" means all patents (including all reissues,
            extensions, substitutions, confirmations, re-registrations,
            re-examinations, invalidations, supplementary protection
            certificates and patents of addition) and patent applications
            (including all provisional applications, continuations,
            continuations-in-part and divisions).

      1.62  "PHASE I STUDY" means a clinical study of an Ophthalmic Product in
            human volunteers or patients the purpose of which is preliminary
            determination of safety and tolerability of a dosing regime and for
            which there are no primary endpoints (as understood by the FDA or
            other Regulatory Authorities) in the protocol relating to efficacy.

      1.63  "PHASE II STUDY" means (a) a dose exploration, dose response,
            duration of effect, kinetics, dynamic relationship or preliminary
            efficacy and safety study of an Ophthalmic Product in the target
            patient population or (b) a controlled dose ranging clinical trial
            to evaluate further the efficacy and safety of an Ophthalmic Product
            in the target patient population and to define the optimal dosing
            regimen.

      1.64  "PHASE III STUDY" means a controlled pivotal clinical study of an
            Ophthalmic Product that is prospectively designed to demonstrate
            statistically whether such Ophthalmic Product is effective and safe
            for use in a particular indication in a manner sufficient to obtain
            Regulatory Approval to market such Ophthalmic Product.

      1.65  "POST-APPROVAL STUDY" means a clinical study Initiated in a country
            after receipt of Regulatory Approval for the Ophthalmic Product in
            such country.

      1.66  "PRE-CLINICAL DEVELOPMENT COLLABORATION" means the Development
            activities undertaken by the Parties to (a) generate, characterize
            and optimize Ophthalmic Products directed to Program Targets and (b)
            support the filing of an IND for


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            Ophthalmic Products, including without limitation, non-clinical
            studies and Manufacturing development activities.

      1.67  "PRODUCT TRADEMARKS" means the trademark(s), service mark(s),
            accompanying logos, trade dress and/or indicia of origin used in
            connection with the distribution, marketing, promotion and sale of
            Ophthalmic Products in the Territory. For purposes of clarity, the
            term Product Trademark(s) shall not include, without limitation, the
            corporate names and logos of either Party, and shall include any
            internet domain names incorporating such Product Trademarks.

      1.68  "PROGRAM" means the VEGF Program or an Additional Program.

      1.69  "PROGRAM TARGET" means VEGF or an Additional Program Target.

      1.70  "PROGRAM WORKPLAN" means the detailed written workplan for each
            Program that is mutually agreed between the Parties pursuant to
            Sections 2.2 and 2.4 of this Agreement.

      1.71  "REGULATORY APPROVAL" means any and all approvals (including pricing
            and reimbursement approvals), licenses, registrations or
            authorizations of any Regulatory Authority, necessary for the
            Development, Commercialization and Manufacture of an Ophthalmic
            Product, including the acceptance or non-rejection of INDs and the
            approval of NDAs.

      1.72  "REGULATORY AUTHORITY" means any applicable government regulatory
            authority involved in granting approvals for the Development,
            Manufacturing, Commercialization, reimbursement and/or pricing of an
            Ophthalmic Product in the Territory, including without limitation
            the FDA.

      1.73  "RELATED PARTY" means a Party's Affiliates and permitted
            Sublicensees, which term does not include wholesale distributors of
            the Party or its Affiliates who purchase Ophthalmic Products from
            such Party or its Affiliates in an arm's length transaction and who
            have no other obligation, including without limitation a reporting
            obligation, to such Party or its Affiliates. For purposes of
            clarity, such wholesale distributors do not include those
            distributors whose obligations to such Party or Affiliate include
            responsibility for sales and/or marketing efforts in a country or
            sharing of costs and expenses with respect to sales and/or marketing
            on behalf of a Party or its Affiliates, which distributors shall be
            deemed to be permitted Sublicensees for purposes of this definition.

      1.74  "RNAI PRODUCT" means a therapeutic, prophylactic or diagnostic
            product containing, comprised of or based on siRNAs or siRNA
            derivatives or other moieties effective in gene function modulation
            and designed to modulate the function of particular genes or gene
            products through RNA interference.

      1.75  "RNAI TECHNOLOGY" means any and all Know-How, whether or not
            patentable, that is useful for the identification, characterization,
            optimization, construction, expression, discovery, development,
            production, manufacture, or use of RNAi Products.


                                       12
<PAGE>
      1.76  "ROYALTY PAYOR" means, in relation to a Royalty-Bearing Product, the
            Party obligated to pay royalties to the other Party under the terms
            and conditions of this Agreement.

      1.77  "ROYALTY RECIPIENT" means, in relation to a Royalty-Bearing Product,
            the Party entitled to receive royalties from the other Party under
            the terms and conditions of this Agreement.

      1.78  "SALES AND MARKETING EXPENSES" means, with respect to a
            Profit-Sharing Product, the internal and external costs and expenses
            incurred by the Parties and their Related Parties in connection with
            the pre-launch market development, and the promotion, marketing,
            selling and product support of such Profit-Sharing Product in the
            United States, in accordance with the Commercialization Plan for
            such Profit-Sharing Product and the related budget for Sales and
            Marketing Expenses, including without limitation:

            (a)   promotional and training materials for the sales
                  representatives;

            (b)   patient support program costs;

            (c)   disease management programs specifically developed for such
                  Profit-Sharing Product;

            (d)   outcomes and pharmacoeconomic studies and Post-Approval
                  Studies for Profit-Sharing Product;

            (e)   costs incurred in conducting joint meetings relating to
                  Commercialization of such Profit-Sharing Product (excluding
                  JCC meetings) prior to the date of First Commercial Sale of
                  such Profit-Sharing Product in the United States (including
                  lodging expenses and travel expenses associated with such a
                  meeting);

            (f)   costs associated with Detailing to physicians;

            (g)   costs associated with market development activities and other
                  similar pre-launch activities;

            (h)   Cost of Goods Sold of samples of such Profit-Sharing Product
                  distributed in accordance with the Commercialization Plan;

            (i)   the costs of internal scientific, medical, technical, quality
                  assurance, quality control or managerial personnel engaged in
                  Commercialization efforts (including without limitation Health
                  Science Associates fielded by the Parties), which costs shall
                  be determined based on the FTE Costs, unless another basis is
                  otherwise agreed by the Parties in writing;

            (j)   other out-of-pocket costs and expenses related to promotion,
                  marketing, selling and product support of such Profit-Sharing
                  Product, including without limitation costs and expenses
                  associated with symposia, seminars, media advertising, market
                  research and direct mailing, that are incurred in accordance
                  with the applicable Commercialization Plan and the related
                  budget; and


                                       13
<PAGE>
            (k)   any other costs explicitly included in the budget for the
                  Commercialization Plan.

      1.79  "SMALL INTERFERING RNA" or "SIRNA" means a double-stranded
            ribonucleic acid (RNA) composition designed to act primarily through
            an RNA interference mechanism that consists of either (a) two
            separate oligomers of native or chemically modified RNA that are
            hybridized to one another along a substantial portion of their
            lengths, or (b) a single oligomer of native or chemically modified
            RNA that is hybridized to itself by self-complementary base-pairing
            along a substantial portion of its length to form a hairpin.

      1.80  "SUBLICENSEE" means a Third Party to whom a Party grants a
            sublicense under any ALNYLAM Technology, MERCK Technology or Joint
            Collaboration IP, as the case may be, to Develop, Manufacture or
            Commercialize an Ophthalmic Product in the Field in the Territory
            subject to Section 7.2.5 or otherwise grants rights to distribute,
            promote or sell an Ophthalmic Product.

      1.81  "TERRITORY" means all of the countries in the world, and their
            territories and possessions.

      1.82  "THIRD PARTY" means an entity other than a Party and its Affiliates.

      1.83  "UNITED STATES" means the United States of America and its
            territories, possessions and commonwealths.

      1.84  "VALID CLAIM" means a claim of: (a) an issued and unexpired Patent
            Right, which claim has not been revoked or held unenforceable,
            unpatentable or invalid by a decision of a court or other
            governmental agency of competent jurisdiction, which is not
            appealable or has not been appealed within the time allowed for
            appeal, and which has not been abandoned, disclaimed, denied or
            admitted to be invalid or unenforceable through reissue,
            re-examination or disclaimer or otherwise, or (b) a patent
            application for a patent included within the Patent Rights that has
            [**] from the earliest date on which such patent application claims
            priority and which claim has not been cancelled, withdrawn or
            abandoned or finally rejected by an administrative agency action
            from which no appeal can be taken.

      1.85  "VEGF" means (a) the genomic locus encoding vascular endothelial
            growth factor (LocusLink ID# 7422, Unigene ID# Hs.73793, OMIM ID#
            192240), [**]

      1.86  "VEGF PRODUCT" means an Ophthalmic Product developed in the VEGF
            Program.

      1.87  "VEGF PROGRAM" means the Program to research and develop Ophthalmic
            Product(s) whose target is VEGF, as more fully described in Section
            2.2 of this Agreement. The VEGF Program is not an Additional
            Program.

      1.88  "WORLDWIDE SALES" means aggregate worldwide Net Sales of a
            Royalty-Bearing Product in a Calendar Year by a Party or its Related
            Parties.

ADDITIONAL DEFINITIONS. The following terms have the meanings set forth in the
corresponding Sections of this Agreement:


                                       14
<PAGE>
<TABLE>
<CAPTION>
            TERM                                                             SECTION
            ----                                                             -------
<S>                                                                          <C>
            "AAA"                                                            13.6.1
            "ACQUIRED PARTY"                                                 13.2.2
            "ADDITIONAL PROGRAM"                                             2.4
            "ALNYLAM INDEMNITEES"                                            10.5.1
            "AGREEMENT TERM"                                                 12.1.2
            "BANKRUPT PARTY"                                                 12.2.2(c)
            "BREACHING PARTY"                                                12.2.1(a)
            "CHANGE OF CONTROL"                                              13.2.2.4
            "CHANGE OF CONTROL NOTICE"                                       13.2.2
            "CODE"                                                           12.2.2(c)
            "COLLABORATION IP"                                               7.1.3
            "COLLABORATION MANAGER"                                          3.2
            "CONTINUING PARTY"                                               4.2
            "CO-PROMOTION AGREEMENT"                                         5.5
            "CO-PROMOTION OPTION EXERCISE DATE"                              5.5
            "CRT AGREEMENT"                                                  7.5
            "DEFENDING PARTY"                                                11.5.4
            "DISPUTE"                                                        13.6.1
            "DIVESTING PARTY"                                                13.2.2.3(c)
            "EFFECTIVE DATE"                                                 Preamble
            "EXCLUDED CLAIM"                                                 13.6.1
            "EXPENSE SHARE REDUCTION OPTION"                                 2.11.1
            "GRANTING PARTY"                                                 7.1.3
            "HUMAN MATERIALS"                                                10.1.5
            "INDEMNITEES"                                                    10.5.4
            "INFRINGEMENT CLAIM"                                             11.5.1
            "INITIAL ENFORCEMENT RIGHTS PARTY"                               11.4.3
            "INITIAL NOTICE"                                                 2.14
            "JCC"                                                            5.1
            "JSC CHAIRPERSON"                                                3.1.2
            "LEAD VEGF PRODUCT"                                              2.5
            "LEAD ROYALTY-BEARING PRODUCT"                                   8.3.2.4
            "LOSSES"                                                         10.5.1
            "MERCK INDEMNITEES"                                              10.5.1
            "NON-ACQUIRED PARTY"                                             13.2.2
            "NON-BANKRUPT PARTY"                                             12.2.2(c)
            "NON-BREACHING PARTY"                                            12.2.1(a)
            "OPT-OUT PARTY"                                                  4.2
            "OPT-OUT PERIOD" AND "OPT-OUT PERIODS"                           4.4.1
            "OPT-OUT POINT"                                                  4.2
            "PARALLEL PROGRAM"                                               2.14
            "PARALLEL PROGRAM INFORMATION"                                   2.14
            "PATENT EXPENSES"                                                11.3.7
            "PHASE I COMPLETION OPT-OUT PERIOD"                              4.4.1(b)
            "PHASE II COMPLETION OPT-OUT PERIOD"                             4.4.1(c)
</TABLE>


                                       15
<PAGE>
<TABLE>

<S>                                                                          <C>
            "PRE-CLINICAL DEVELOPMENT COLLABORATION TERM"                    2.12.1
            "PRE-IND FILING OPT-OUT PERIOD"                                  4.4.1(a)
            "PRODUCT OPT-OUT RIGHT"                                          4.4
            "PRODUCT OPT-OUT POINT"                                          4.4.2(a)
            "PROFIT-SHARING PRODUCT"                                         4.1
            "PROSECUTING PARTY"                                              11.3.5
            "PROVIDERS"                                                      10.1.5
            "RECEIVING PARTY"                                                12.3.1
            "REGION"                                                         12.2.2(d)
            "REQUESTED PARTY"                                                2.9
            "ROYALTY-BEARING PRODUCT"                                        4.2
            "SECONDARY ENFORCEMENT RIGHTS PARTY"                             11.4.3
            "SIGNIFICANT PHARMACEUTICAL COMPANY"                             13.2.2.4
            "SOLE COMMERCIALIZATION PARTY"                                   13.2.2.3(c)
            "SPC"                                                            11.8
            "STANFORD AGREEMENT"                                             7.5
            "TARGET OPT-OUT RIGHT"                                           4.3
            "TARGET OPT-OUT POINT"                                           4.3(i)
            "TRANSFERRING PARTY"                                             12.3.1
            "U.S. CO-PROMOTION OPTION"                                       5.5
            "U.S. DEVELOPMENT EXPENSES"                                      2.11.1
            "U.S. OPERATING PROFIT/LOSS"                                     8.2
</TABLE>

2.    DEVELOPMENT COLLABORATION

      2.1   OVERVIEW. The Parties shall collaborate in carrying out the
            Ophthalmic Collaboration with the objective of Developing Ophthalmic
            Products in the Field. The Parties anticipate that there will be
            [**] Programs in the Ophthalmic Collaboration, each focused on
            Developing Ophthalmic Products directed to different Program
            Targets. The Development of each Ophthalmic Product shall be
            governed by the applicable Program Workplan and the Parties agree to
            conduct all their Development activities relating to the Ophthalmic
            Products in accordance with the applicable Program Workplan.

      2.2   INITIAL DEVELOPMENT PROGRAM. The first Program in the Ophthalmic
            Collaboration will be the VEGF Program. The activities to be
            undertaken in the course of the VEGF Program are set forth in the
            Program Workplan attached hereto as Schedule 2.2, which may be
            amended from time to time upon the mutual written agreement of
            authorized representatives of the Parties. The focus of the Program
            Workplan for the VEGF Program will be on the further
            characterization, optimization and development of Ophthalmic
            Products directed to VEGF as candidates for Clinical Studies, and as
            appropriate, the conduct of these studies.

      2.3   INITIAL CONTRIBUTION OF OPHTHALMIC PRODUCTS. On the Effective Date,
            ALNYLAM shall contribute to the VEGF Program any Ophthalmic Products
            that are directed to VEGF that have been generated by ALNYLAM and
            its Affiliates prior to the Effective Date, including without
            limitation those identified on Schedule 2.3.


                                       16
<PAGE>
      2.4   ADDITIONAL DEVELOPMENT PROGRAMS. Within [**] after the Effective
            Date, the JSC will select [**] Additional Program Targets. Within
            [**] after the selection of each Additional Program Target, the JSC
            will agree upon a Program Workplan for a Program to research and
            develop one or more Ophthalmic Products directed to each such
            Additional Program Target (each such Program, an "Additional
            Program"). The focus of the Program Workplans for the Additional
            Programs will be on generating, characterizing and optimizing
            Ophthalmic Products directed to the Additional Program Targets for
            further Development in the Field, including Clinical Studies, and as
            appropriate, the conduct of these studies. Each Party will
            contribute to each Additional Program any Ophthalmic Products
            directed to the applicable Additional Program Target that have been
            generated by such Party prior to the selection of the applicable
            Additional Program Target. The Program Workplan for each Additional
            Program will identify such Ophthalmic Products (if any) and Schedule
            2.3 will be updated to include such Ophthalmic Products.

      2.5   COLLABORATION ACTIVITIES. The Program Workplans shall allocate
            Development tasks between the Parties consistent with their
            respective capabilities and, to the extent possible and
            scientifically sound, in a manner to maximize the expeditious and
            cost-effective Development and Manufacture of Ophthalmic Products.
            With respect to each Ophthalmic Product and Program, ALNYLAM will be
            responsible for the following activities under the applicable
            Program Workplan: (a) [**] activities, and (b) [**] studies [**]. In
            addition, with respect to the VEGF Product that is at the most
            advanced stage of Development (the "Lead VEGF Product"), ALNYLAM
            will be primarily responsible for [**] activities and pursuant to
            Section 2.10.2 below, [**]. With respect to each Ophthalmic Product
            and Program, MERCK shall be responsible for the following activities
            under the applicable Program Workplan: (i) [**] Products [**], (ii)
            [**] activities [**] and (iii) [**] Products [**] (including,
            without limitation, [**] in accordance with the applicable Program
            Workplan).

      2.6   THIRD PARTIES.

      2.6.1 PERFORMANCE OF COLLABORATION ACTIVITIES. The Parties shall be
            entitled to utilize the services of Third Parties (including Third
            Party contract research organizations) to perform their respective
            Development and Manufacturing activities under the Program
            Workplans; provided that each Party shall remain at all times fully
            liable for its respective responsibilities under the Program
            Workplans. Neither Party shall use Third Party contract resources to
            conduct part or all of its obligations under the Ophthalmic
            Collaboration unless the non-contracting Party's rights under the
            agreement with the Third Party contract research organization
            guarantee the non-contracting Party the same rights under this
            Agreement as if the contracting Party had done the work itself, and
            any such Third Party agreement shall include confidentiality and
            non-use provisions which are no less stringent than those set forth
            in Article 9 of this Agreement.

      2.6.2 COLLABORATIONS. In addition, the Parties agree that it may be
            necessary or useful to enter into Third Party collaborations which
            provide technology, information, data or know-how, patentable or
            otherwise, which is necessary or useful for MERCK and/or ALNYLAM to
            perform its obligations under the Ophthalmic Collaboration. Such
            Third


                                       17
<PAGE>
             Party collaborations shall not conflict with the terms and
             conditions of this Agreement. In the event that any such Third
             Party collaborations are contemplated in connection with the
             Ophthalmic Collaboration, the JSC shall discuss, subject to Third
             Party confidentiality obligations, and agree upon entering into
             such Third Party collaborations, and the applicable Program
             Workplan shall be amended to include such Third Party
             collaborations. The Parties shall use good faith efforts to ensure
             that, to the extent possible, all such Third Party collaborations
             shall provide that any and all data and results, discoveries and
             inventions, whether patentable or not, arising out of the Third
             Party collaboration may be used by bona fide collaborators of the
             Party entering into the Third Party collaboration agreement and
             shall include confidentiality and non-use provisions which are no
             less stringent than those set forth in Article 9 of this Agreement.
             In addition, the Party entering into such Third Party
             collaborations shall use reasonable efforts to obtain a right to
             sublicense to the other Party and its Related Parties any
             intellectual property arising out of the Third Party collaboration
             for use in connection with the Ophthalmic Collaboration.

      2.7    DILIGENCE. Each Party shall use Commercially Reasonable Efforts to
             perform its respective Development and Manufacturing activities
             under the Program Workplans in accordance with this Agreement
             according to the priorities established by the Program Workplans
             and the JSC.

      2.8    RECORDS. Each Party shall maintain scientific records, in
             sufficient detail and in good scientific manner appropriate for
             patent and regulatory purposes, which shall fully and properly
             reflect all work done and results achieved in the performance of
             the Ophthalmic Collaboration by such Party. Each Party shall have
             the right, during normal business hours and upon reasonable notice,
             to inspect and copy (or request the other Party to copy) all
             records of the other Party maintained in connection with the work
             done and results achieved in the performance of the Programs, but
             solely to the extent to which such records relate to a
             Profit-Sharing Product or to the extent access to such records is
             necessary for a Party to exercise its rights under this Agreement.
             All such records and the information disclosed therein shall be
             maintained in confidence by the recipient in accordance with
             Article 9.

      2.9    AVAILABILITY OF EMPLOYEES. Each Party (the "Requested Party") shall
             make available its employees engaged in the Programs upon
             reasonable notice during normal business hours and at their
             respective places of employment to consult with the other Party on
             the progress of the Programs, as coordinated through the Requested
             Party's Collaboration Manager or such other individual as may be
             designated by the Requested Party.

      2.10   REGULATORY MATTERS AND COMPLIANCE FOR PROFIT-SHARING PRODUCTS.

      2.10.1 OWNERSHIP AND REFERENCE RIGHT. Subject to Section 2.10.2, [**] the
             Regulatory Approvals and related regulatory documents submitted to
             the applicable Regulatory Authorities for all Profit-Sharing
             Products. The Party owning any Regulatory Approval and related
             regulatory documents shall license, including for cross-reference
             purposes, transfer, provide a letter of reference with respect to,
             or take other action necessary to make available such Regulatory
             Approvals and related regulatory documents to the


                                       18
<PAGE>
             other Party as may be reasonably necessary to enable such other
             Party to fulfill its obligations under the applicable Program
             Workplan and/or Commercialization Plan and exercise its rights
             under this Agreement with respect to the Development and
             Commercialization of such Profit-Sharing Products in the Field in
             the Territory.

      2.10.2 VEGF PRODUCT IND. Notwithstanding the general provisions of Section
             2.10.1, [**] filing the IND for the Lead VEGF Product. [**]
             preparing and promptly supplying the [**] information for such IND
             and [**] preparing and promptly supplying [**], including without
             limitation, the [**]. Promptly after acceptance of such IND by the
             applicable Regulatory Authority, [**].

      2.10.3 REGULATORY COORDINATION. Except as otherwise provided in Section
             2.10.2, Section 2.10.4, Section 5.7 or the applicable Program
             Workplan, [**] (a) [**], (b) be responsible for [**], and (c) [**]
             under this Section 2.10, and to comply with its disclosure
             requirements under applicable securities laws. Except as otherwise
             provided in Section 2.10.2, Section 2.10.4 or Section 5.7, [**]
             shall have the right [**] with respect to Profit-Sharing Products.

      2.10.4 MANUFACTURING REGULATORY COMMUNICATIONS. Notwithstanding any
             provisions of Section 2.10.3 to the contrary, with respect to all
             regulatory issues related to the Manufacture of Profit-Sharing
             Products, including all matters relating to cGMP compliance, (a) in
             the case of supply of a Profit-Sharing Product [**], and (b) in the
             case of supply of a Profit-Sharing Product for [**]:

             (i)    be primarily responsible for [**], each Regulatory
                     Authority;

             (ii)   be primarily responsible for [**] each Regulatory Authority;

             (iii)  be responsible for [**];

             (iv)   notify [**] a Regulatory Authority [**]; and

             (v)    provide to the [**] Regulatory Authority [**].

      2.10.5 REPORTING ADVERSE EXPERIENCES. The Parties will develop and agree
             upon safety data exchange procedures governing the coordination of
             collection, investigation, reporting, and exchange of information
             concerning any adverse experiences, and any product quality and
             product complaints involving adverse experiences, related to a
             Profit-Sharing Product, sufficient to permit each Party to comply
             with its legal obligations.

      2.10.6 COMPLIANCE. Each Party shall conduct the Ophthalmic Collaboration
             and the Development, Manufacture and Commercialization of
             Profit-Sharing Products in accordance with all applicable laws,
             rules and regulations, including without limitation current
             governmental regulations concerning good laboratory practices, good
             clinical practices and good manufacturing practices.

      2.11   FUNDING OF THE DEVELOPMENT COLLABORATION.

      2.11.1 From the Effective Date, with respect to each Profit-Sharing
             Product, the Parties will each bear fifty percent (50%) of all
             Development Expenses incurred in the conduct of


                                       19
<PAGE>
             the Program Workplan for such Profit-Sharing Product in order to
             generate data primarily to support Regulatory Approval of such
             Profit-Sharing Product in the United States ("U.S. Development
             Expenses"). For the avoidance of doubt, U.S. Development Expenses
             may include expenses related to Clinical Studies performed outside
             of the United States in support of Regulatory Approval in the
             United States. The applicable Program Workplan will identify each
             Clinical Study that is primarily in support of Regulatory Approval
             of a Profit-Sharing Product in the United States. Prior to the
             Initiation of the first Phase III Study with respect to each
             Profit-Sharing Product, each Party has a one-time option to reduce
             its percentage share of U.S. Development Expenses related to such
             Profit-Sharing Product ("Expense Share Reduction Option");
             provided, however, that in no event will such percentage share be
             less than [**] percent ([**]%). A Party may exercise such option by
             providing [**] prior written notice to the other Party of such
             exercise and the percentage share of U.S. Development Expenses to
             be borne by such Party. In the event that [**] exercises its
             Expense Share Reduction Option with respect to any Profit-Sharing
             Product, [**] over the Development, Manufacturing and
             Commercialization activities for such Profit-Sharing Product with
             respect to the United States and the appropriate changes will be
             made to the provisions of this Agreement to reflect [**], including
             without limitation, the reallocation of responsibility for [**]
             with respect to the United States.

      2.11.2 From the Effective Date, with respect to each Profit-Sharing
             Product, MERCK will bear one hundred percent (100%) of the
             Development Expenses incurred in the conduct of the Program
             Workplan for such Profit-Sharing Product in order to generate data
             primarily to support Regulatory Approval of such Profit-Sharing
             Product in the Territory outside the United States.

      2.11.3 Each Program Workplan under the Ophthalmic Collaboration shall be
             accompanied by a budget prepared by the Parties setting forth the
             projected Development Expenses for such Program relating to the
             United States. Such Program Workplan budgets shall be reviewed and
             approved at least annually by the JSC pursuant to Section 3.1.4.
             U.S. Development Expenses identified within the budget for the
             applicable Program Workplan approved by the JSC shall initially be
             borne by the Party incurring the cost or expense, subject to
             reimbursement as provided in Section 2.11.4. ALNYLAM and MERCK
             shall report quarterly to each other on their U.S. Development
             Expenses with respect to the immediately preceding Calendar
             Quarter, if any, with such reports to be submitted within thirty
             (30) days after the end of each Calendar Quarter. The Parties shall
             seek to resolve any questions related to such U.S. Development
             Expenses within fifteen (15) days following receipt.

      2.11.4 The Party that incurs more than its share of the total actual U.S.
             Development Expenses for a Profit-Sharing Product shall be paid by
             the other Party an amount sufficient to reconcile to its agreed
             percentage of actual U.S. Development Expenses in each Calendar
             Quarter; provided that total actual U.S. Development Expenses for
             both Parties for the Calendar Year to date have not exceeded [**]%
             of budgeted U.S. Development Expenses for such Profit-Sharing
             Product for the Calendar Year to date. If total actual U.S.
             Development Expenses exceeded budgeted U.S. Development Expenses by
             more than [**]% for the Calendar Year to date, the reimbursing
             Party shall



                                       20
<PAGE>
             first pay the other Party an amount sufficient to cause the
             reimbursing Party to have borne its stated percentage of [**]% of
             the budgeted U.S. Development Costs. Actual U.S. Development
             Expenses in excess of [**]% of budgeted U.S. Development Expenses
             shall also be reimbursed if (i) both Parties approve the additional
             U.S. Development Expenses in advance or (ii) such excess U.S.
             Development Expenses are the result of work carried out in response
             to a governmental requirement to do such work and the Party
             incurring such excess U.S. Development Expenses has notified the
             other Party prior to incurring such excess U.S. Development
             Expenses. Subject to the foregoing clause (ii), any proposal to
             increase U.S. Development Expense for any Calendar Year by more
             than [**]% of the U.S. Development Expenses budgeted for such
             Calendar Year, if the Parties are unable to reach consensus on such
             issue, after referral to the executive officers of the Parties
             pursuant to Section 13.6.1, shall not be approved. Reconciling
             payments under this Section 2.11.4 shall be made within thirty (30)
             days of receipt of the other Party's quarterly report.

      2.12   PRE-CLINICAL DEVELOPMENT COLLABORATION TERM.

      2.12.1 TERM. Except as otherwise provided herein, the term of the
             Pre-Clinical Development Collaboration shall commence on the
             Effective Date and continue until the[**]anniversary of the
             Effective Date (the "Pre-Clinical Development Collaboration Term");
             provided, however, that the Parties will cooperate in the orderly
             cessation of any Clinical Studies of the Ophthalmic Products that
             are ongoing at the end of the Pre-Clinical Development
             Collaboration Term and mutually agree on sharing any associated
             expenses. The Parties may extend the Pre-Clinical Development
             Collaboration Term by mutual written agreement of authorized
             representatives of the Parties.

      2.12.2 EFFECT OF EXPIRATION. No later than [**] prior to expiration of the
             Pre-Clinical Development Collaboration Term, the Parties, through
             the JSC, shall discuss any Ophthalmic Products that are not
             Royalty-Bearing Products and have not yet advanced to the Pre-IND
             Filing Opt-Out Period and shall mutually agree which Party shall be
             the Continuing Party for such Ophthalmic Product. Following the
             expiration of the Pre-Clinical Development Collaboration Term, such
             Ophthalmic Product shall be deemed a Royalty-Bearing Product under
             this Agreement. The Continuing Party shall be free to Develop,
             Manufacture and Commercialize such Royalty-Bearing Product in the
             Territory, with or without a partner or collaborator and without
             any further obligation to the other Party with respect to such
             activities under this Agreement, except for (a) the continuing
             obligations of the Parties set forth in Article 6 and (b) the
             obligation of the Continuing Party to pay the other Party
             [**]percent ([**]%) of the royalties that would be payable by the
             Continuing Party to the other Party under Section 8.3.2 had such
             Continuing Party exercised its Product Opt-Out Right with respect
             to such Royalty-Bearing Product during the Pre-IND Filing Opt-Out
             Period; provided, however, that if MERCK is the Continuing Party,
             in no event shall the royalties payable by MERCK to ALNYLAM with
             respect to Net Sales in a country for any Calendar Quarter be less
             than the amount of any royalties and any portions of milestones or
             other payments under the Existing ALNYLAM In-Licenses that are
             reasonably allocable to the Commercialization or Manufacture of
             such Royalty-Bearing Product in or for such country in the Field.


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<PAGE>
      2.13  EXCLUSIVITY. Except as provided in Section 2.6 of this Agreement and
            the Research Collaboration and License Agreement dated September 8,
            2003 among MERCK, ALNYLAM (formerly Alnylam Holding Co.) and Alnylam
            U.S. Inc. (formerly Alnylam Pharmaceuticals, Inc.),

            (a)   During the Pre-Clinical Development Collaboration Term,
                  neither Party nor any of its Affiliates shall, alone or with a
                  Third Party, [**]in the Field in the Territory;

            (b)   Until the [**] anniversary of the date of First Commercial
                  Sale of the first Ophthalmic Product directed to a Program
                  Target, neither Party nor any of its Affiliates shall, alone
                  or with a Third Party, [**] in the Field in the Territory,
                  provided that this obligation shall terminate in the event
                  that no Ophthalmic Product directed to such Program Target is
                  being Developed or Commercialized;

            (c)   Following the exercise by a Party of its Target Opt-Out Right
                  with respect to a Program Target, the rights of each Party to
                  research, develop, manufacture or commercialize with Third
                  Parties RNAi Products directed to the applicable Program
                  Target shall be governed by Section 4.3(e).

      2.14  RIGHT OF FIRST NEGOTIATION. During the Pre-Clinical Development
            Collaboration Term, [**] (a) commencing the research, development
            and/or commercialization of any RNAi Product (i) within the Field
            and directed to a target gene or gene product [**]; or [**] shall
            include material information relating to [**] shall have [**], then
            the Parties shall [**] in an effort to [**] within such [**] within
            such [**].

      2.15  IN-LICENSES. With respect to each Profit-Sharing Product, if either
            Party identifies any Necessary Third Party IP that at the time of
            identification is not Controlled by a Party, such Party shall notify
            the JSC and include in such notification a summary of such Necessary
            Third Party IP, the anticipated commercial terms of the necessary
            license and any other relevant information. The JSC shall discuss
            whether a license to such Necessary Third Party IP should then be
            obtained by taking into consideration any commercial advantages
            associated with the timing of licensing such Necessary Third Party
            IP, the usefulness or necessity of such Necessary Third Party IP to
            the success of the Development, Manufacture or Commercialization of
            the applicable Profit-Sharing Product and any other factors the JSC
            deems relevant. If the JSC determines that a license to such
            Necessary Third Party IP should be obtained, the JSC shall determine
            which Party shall be responsible for negotiating and entering into
            such license and such license, if executed, shall be an "In-License"
            of that Party; provided, however, that ALNYLAM shall be responsible
            for negotiating and entering into any licenses of Broad RNAi
            Technology that constitute Necessary Third Party IP. Prior to
            execution of any such license, the negotiating party shall present
            the license in substantially final form to the JSC for review and
            approval. If the JSC does not approve such license, such license
            shall not constitute an "In-License" under this Agreement. Each
            Party shall comply with all applicable terms and conditions of the
            In-Licenses of the other Party and shall take such actions as may be
            required to allow such Party to comply with its obligations


                                       22
<PAGE>
             thereunder, including obligations relating to patent matters,
             confidentiality, indemnification and diligence. The Parties agree
             that this Section 2.15 shall not apply to any In-Licenses entered
             into by either Party or its Affiliates prior to the Effective Date
             of this Agreement. [**].

      2.16   TRANSFER OF KNOW-HOW.

      2.17   GENERAL. Each Party shall provide to the other Party, at such other
             Party's request, any and all Know-How related to Program Targets
             and Profit-Sharing Products directed to such Program Targets that
             is Controlled by such Party, or in the absence of such request,
             such Know-How Controlled by such Party as the providing Party
             reasonably believes is necessary for the other Party to perform its
             obligations or exploit its rights under this Agreement, including
             without limitation in the Development, Manufacture and
             Commercialization of Profit-Sharing Products. In particular, but
             without limiting the generality of the foregoing, each Party shall
             provide to the other all Know-How Controlled by such Party that it
             reasonably believes will assist the Parties in evaluating and
             selecting the Additional Program Targets. Each Party shall use such
             Know-How solely for the purposes of performing its obligations or
             exploiting its rights under this Agreement with respect to such
             Program Targets and Profit-Sharing Products.

      2.17.1 DEVELOPMENT MATERIALS. With respect to Know-How that consists of
             Development Materials, each Party may provide to the other Party
             Development Materials Controlled by the supplying Party for use by
             the other Party in furtherance of the Programs. Except as otherwise
             provided under this Agreement or explicitly authorized in writing
             by the supplying Party, all such Development Materials delivered to
             the receiving Party shall remain the sole property of the supplying
             Party, shall be used only in furtherance of the applicable Program
             and solely under the control of the receiving Party and shall not
             be used or delivered to or for the benefit of any Third Party
             without the prior written consent of the supplying Party. The
             Development Materials supplied under this Section 2.16.2 must be
             used with prudence and appropriate caution in any experimental
             work, since not all their characteristics may be known; however,
             the supplying Party shall notify the receiving Party of any health
             hazards of which it is or becomes aware relating to the use or
             handling of the Development Materials. THE DEVELOPMENT MATERIALS
             ARE PROVIDED "AS IS" AND WITHOUT ANY REPRESENTATION OR WARRANTY,
             EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION ANY IMPLIED
             WARRANTY OF SATISFACTORY QUALITY, MERCHANTABILITY OR OF FITNESS FOR
             ANY PARTICULAR PURPOSE, OR SAVE AS SPECIFICALLY PROVIDED IN THIS
             AGREEMENT, ANY WARRANTY THAT THE USE OF THE DEVELOPMENT MATERIALS
             WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER PROPRIETARY RIGHTS
             OF ANY THIRD PARTY.

3.    COLLABORATION MANAGEMENT

      3.1    JOINT STEERING COMMITTEE. The Parties hereby establish a committee
             to facilitate the Ophthalmic Collaboration as follows:


                                       23
<PAGE>
      3.1.1 COMPOSITION OF THE JOINT STEERING COMMITTEE. The Ophthalmic
            Collaboration shall be conducted under the direction of a joint
            steering committee (the "JSC") comprised of three (3) named
            representatives of MERCK and three (3) named representatives of
            ALNYLAM. Each Party shall appoint its respective representatives to
            the JSC from time to time, and may substitute one or more of its
            representatives, in its sole discretion, effective upon notice to
            the other Party of such change. Each Party shall have at least one
            JSC representative who is a senior employee (director level or
            above), and all JSC representatives shall have appropriate research,
            preclinical, manufacturing, clinical development or
            commercialization expertise and ongoing familiarity with the
            Ophthalmic Collaboration. Additional representatives or consultants
            may from time to time, by mutual consent of the Parties, be invited
            to attend JSC meetings, subject to such representatives' and
            consultants' written agreement to comply with the requirements of
            Section 9.1. Each Party shall bear its own expenses relating to
            attendance at such meetings by its representatives.

      3.1.2 JSC CHAIRPERSON. The "JSC Chairperson" shall rotate every twelve
            (12) months between ALNYLAM and MERCK. The initial JSC Chairperson
            shall be a representative of ALNYLAM. The JSC Chairperson's
            responsibilities shall include (a) scheduling meetings at least once
            per Calendar Quarter, but more frequently if the JSC determines it
            necessary; (b) setting agenda for meetings with solicited input from
            other members; (c) confirming and delivering minutes to the JSC for
            review and final approval; and (d) conducting effective meetings,
            including ensuring that objectives for each meeting are set and
            achieved.

      3.1.3 MEETINGS. The JSC shall meet in accordance with a schedule
            established by mutual written agreement of the Parties, but no less
            frequently than once per Calendar Quarter, with the location for
            such meetings alternating between ALNYLAM and MERCK facilities (or
            such other locations as are determined by the JSC). Alternatively,
            the JSC may meet by means of teleconference, videoconference or
            other similar communications equipment, but at least two meetings
            per year shall be conducted in person.

      3.1.4 JSC RESPONSIBILITIES. The JSC shall have the following
            responsibilities with respect to the Ophthalmic Collaboration:

            (a)   determining the overall Development strategy for the Programs
                  and the Ophthalmic Products in the Field in the Territory;

            (b)   evaluating and selecting [**] Additional Program Targets by no
                  later than [**] following the Effective Date;

            (c)   reviewing for approval the Program Workplans for the
                  Additional Programs (including without limitation, identifying
                  each Clinical Study in such Program Workplans that is
                  primarily in support of Regulatory Approval of a
                  Profit-Sharing Product in the United States) within sixty (60)
                  days after the selection of the Additional Program Targets by
                  the JSC, and reviewing for approval the related Development
                  Expense budgets described in Section 2.11.3 within ninety


                                       24
<PAGE>
                  (90) days after the selection of the Additional Program
                  Targets by the JSC, in each case with appropriate input from
                  ALNYLAM and MERCK senior management;

            (d)   reviewing for approval (i) an annual update to each Program
                  Workplan and the related Development Expense budgets described
                  in Section 2.11.3, no later than December 31 of each Calendar
                  Year, and (ii) any modifications to such Program Workplans and
                  Development Expense budgets within thirty (30) days of each
                  submission to the JSC (including without limitation,
                  identifying each Clinical Study in such updates and
                  modifications to such Program Workplans that is primarily in
                  support of Regulatory Approval of a Profit-Sharing Product in
                  the United States);

            (e)   determining each Party's responsibilities under the Program
                  Workplans consistent with Section 2.5;

            (f)   facilitating the transfer of Know-How and Information between
                  the Parties for purposes of conducting the Program Workplans;

            (g)   regularly assessing the progress of the Parties in their
                  conduct of the Program Workplans and against the timelines and
                  budgets contained therein, reviewing relevant data,
                  considering issues of priority, and determining which
                  Profit-Sharing Products to advance into clinical development;

            (h)   reviewing for approval any Manufacturing plans for
                  Profit-Sharing Products and overseeing activities conducted
                  thereunder;

            (i)   reviewing for approval, within the Parties' regular business
                  cycles, but no later than [**] days after a proposal is made
                  to the JSC by either Party, the entry of any Profit-Sharing
                  Product into IND-Enabling GLP Toxicology Studies;

            (j)   reviewing for approval, within the Parties' regular business
                  cycles, but no later than [**] days after a proposal is made
                  to the JSC by either Party, the submission of an IND with
                  respect to any Profit-Sharing Product;

            (k)   reviewing for approval the terms of any In-License under
                  Section 2.15;

            (l)   reviewing for approval proposed Third Party collaborations in
                  accordance with Section 2.6; and

            (m)   performing such other activities as are contemplated under
                  this Agreement or that the Parties agree shall be the
                  responsibility of the JSC.

      3.2   APPOINTMENT OF SUBCOMMITTEES, PROJECT TEAMS AND COLLABORATION
            MANAGERS. The JSC shall be empowered to create such subcommittees of
            itself and additional project teams as it may deem appropriate or
            necessary. Each such subcommittee and project team shall report to
            the JSC, which shall have authority to approve or reject
            recommendations or actions proposed thereby subject to the terms of
            this Agreement.


                                       25
<PAGE>
            Each Party shall also designate a "Collaboration Manager." The
            Collaboration Managers will be responsible for the day-to-day
            worldwide coordination of the Ophthalmic Collaboration and will
            serve to facilitate communication between the Parties. Each Party
            may change its designated Collaboration Manager from time to time
            upon written notice to the other Party.

      3.3   REPORTS AND MINUTES. Each Party will provide the members of the JSC
            with written copies of all materials they intend to present at the
            JSC meeting. The JSC may also request at any time specific data or
            information related to Development activities or that a written
            report be prepared in advance of any meeting summarizing certain
            material data and information arising out of the conduct of the
            Development activities and the Party or appropriate committee to
            whom such request is made shall promptly provide to the other Party
            or JSC such report, data or information. A secretary shall be
            appointed for each meeting and shall prepare minutes of the meeting,
            which shall provide a description in reasonable detail of the
            discussions held at the meeting and a list of any actions, decisions
            or determinations approved by the JSC.

      3.4   DECISION MAKING.

      3.4.1 FINAL DECISION-MAKING. The JSC shall operate by consensus; provided,
            however, that the JSC shall not have final decision-making authority
            regarding issues relating to the following matters for each
            Profit-Sharing Product:

            (a)   [**];

            (b)   [**]; and

            (c)   [**];

            provided, however, that if [**] with respect to any Profit-Sharing
            Product[**] such Profit-Sharing Product [**].

      3.4.2 BUDGETS. As set forth in Sections 3.1.4(c) and (d), for
            Profit-Sharing Products, the JSC shall have primary responsibility
            to review and approve Development Expense budgets for Program
            Workplans, including budgets related to Development activities over
            which one Party has final decision-making authority pursuant to
            Section 3.4.1. In recognition of the importance of budgets, each
            Party shall have the full opportunity to review and comment on
            budgets before final approval. Any disputes related to budgets shall
            be resolved in accordance with Section 3.5.2.

      3.4.3 VOTING. With respect to decisions of the JSC, the representatives of
            each Party shall have collectively one vote on behalf of such Party.
            For each meeting of the JSC, at least two (2) representatives of
            each Party shall constitute a quorum. Action on any matter may be
            taken at a meeting, by teleconference, videoconference or by written
            agreement.

      3.5   DISPUTES. The JSC shall attempt to resolve any and all disputes
            relating to the Ophthalmic Collaboration by unanimous consensus.
            [**].


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<PAGE>
      3.5.1 With respect to a dispute concerning a matter provided for in
            Section 3.4.1, [**]; provided, however, that the [**] by the JSC
            [**] the JSC shall provide the [**] decision.

      3.5.2 With respect to a dispute concerning a matter provided for in
            Section 3.4.2, [**]; provided, however, that [**] consideration by
            the JSC, [**] the JSC shall provide the [**] decision.

      3.5.3 With respect to all other matters except those relating to the Cost
            of Goods Sold of an Ophthalmic Product as described in Section 1.21,
            if the JSC is unable to resolve such dispute, and the dispute is
            material, then the dispute shall be submitted to escalating levels
            of MERCK and ALNYLAM senior management for review. If the dispute
            cannot be resolved despite escalation, then the dispute resolution
            provisions of Section 13.6 shall apply.

      3.6   DISSOLUTION OF JSC. The JSC shall be dissolved at the end of the
            Ophthalmic Collaboration.

4.    OPT-OUT RIGHTS.

      4.1   JOINT DEVELOPMENT AND COMMERCIALIZATION. Each Ophthalmic Product
            being jointly Developed and Commercialized by the Parties under this
            Agreement shall be referred to as a "Profit-Sharing Product", unless
            and until a Party exercises its Opt-Out Rights with respect to such
            Profit-Sharing Product.

      4.2   SOLE PARTY DEVELOPMENT AND COMMERCIALIZATION. If either Party (the
            "Opt-Out Party") exercises its Opt-Out Rights with respect to a
            Profit-Sharing Product or a Program Target, and the other Party
            elects, by notice to the Opt-Out Party within [**] after the Target
            Opt-Out Point or the Product Opt-Out Point, as the case may be
            (each, an "Opt-Out Point"), to continue the Development and
            Commercialization of such product (such other Party after such
            election, a "Continuing Party"), such Profit-Sharing Product will
            thereafter be referred to as a "Royalty-Bearing Product."

      4.3   TARGET OPT-OUT RIGHTS. Each Party shall have the right to narrow the
            Parties' collaboration hereunder to exclude a Program Target and all
            Ophthalmic Products directed to such Program Target (a "Target
            Opt-Out Right"), subject to the following terms and conditions:

            (i)   a party may exercise its Target Opt-Out Right with respect to
                  a Program by giving the other Party [**] prior written notice
                  of the Opt-Out Party's intent to exercise its Target Opt-Out
                  Right; provided, however, that a Party may not exercise its
                  Target Opt-Out Right with respect to a Program until after
                  completion of the final IND-Enabling GLP Toxicology Study for
                  the most advanced Ophthalmic Product in such Program, and such
                  Target Opt-Out Right shall not apply to any Ophthalmic Product
                  in such Program after the expiration of the End of Phase II
                  Completion Opt-Out Period for such Product. On the effective
                  date of the exercise of such Target Opt-Out Right (the "Target
                  Opt-Out Point"):


                                       27
<PAGE>
            (a)   the definition of Program Targets shall thereafter be narrowed
                  to exclude the applicable Program Target, the definition of
                  Programs shall thereafter be narrowed to exclude the Program
                  for such Program Target, and if the Party that is not the
                  Opt-Out Party does not elect to become the Continuing Party
                  for any Ophthalmic Products in the Program, the definition of
                  Ophthalmic Product shall thereafter be narrowed to exclude any
                  such Ophthalmic Products;

            (b)   if the Party that is not the Opt-Out Party elects to become
                  the Continuing Party for one or more Ophthalmic Products in
                  such Program, then such Ophthalmic Products will be deemed
                  Royalty-Bearing Products and the provisions of Section 12.3
                  shall apply to each such Royalty-Bearing Product;

            (c)   if the Party that is not the Opt-Out Party does not elect to
                  become the Continuing Party for any Ophthalmic Products in
                  such Program, then except for the provisions of this Agreement
                  that survive termination of this Agreement pursuant to Section
                  12.4 and this Section 4.3, the financial, license and other
                  terms of this Agreement shall no longer apply to such Program
                  Target or Program or the Development, Manufacture and
                  Commercialization of Ophthalmic Products in such Program;

            (d)   the Continuing Party shall be free to Develop, Manufacture and
                  Commercialize the Royalty-Bearing Products directed against
                  such Program Target, in the Field in the Territory, with or
                  without a partner or collaborator and without any further
                  obligation to the Opt-Out Party with respect to such
                  activities under this Agreement, subject to the continuing
                  obligations of the Parties with respect to Royalty-Bearing
                  Products set forth in Article 6 and Sections 8.1.3.2 and
                  8.3.2;

            (e)   provided that the Party that is not the Opt-Out Party elects
                  to become the Continuing Party for one or more Ophthalmic
                  Products in such Program, for a period of two (2) years after
                  the Target Opt-Out Point neither the Opt-Out Party nor any of
                  its Affiliates shall, alone or with a Third Party, research,
                  develop, manufacture or commercialize RNAi Products directed
                  to such Program Target in the Field in the Territory; and

            (f)   the licenses granted to the Opt-Out Party by the Continuing
                  Party with respect to such Ophthalmic Product set forth in
                  Article 7 shall terminate and the licenses granted to the
                  Continuing Party by the Opt-Out Party with respect to such
                  Ophthalmic Product set forth in Article 7 shall continue in
                  full force and effect.

      4.4   PRODUCT OPT-OUT RIGHTS. Each Party shall have the right to elect not
            to participate in the Development and Commercialization of any
            Ophthalmic Product (a "Product Opt-Out Right") subject to the
            following terms and conditions:

      4.4.1 A Party may exercise its Product Opt-Out Right with respect to a
            Profit-Sharing Product by giving the other Party [**] prior written
            notice of such exercise during any of the following periods:


                                       28
<PAGE>
            (a)   after [**] such Profit-Sharing Product, [**] for such
                  Profit-Sharing Product [**] Opt-Out Period");

            (b)   within [**] such Profit-Sharing Product ("[**] Opt-Out
                  Period"); or

            (c)   within [**] such Profit-Sharing Product ("[**] Opt-Out
                  Period").

            The [**] Opt-Out Period, [**] Opt-Out Period and [**] Opt-Out Period
            are each referred to as an "Opt-Out Period" and collectively as the
            "Opt-Out Periods."

      4.4.2 Upon the exercise by a Party of its Product Opt-Out Rights with
            respect to a Profit-Sharing Product,

            (a)   the effective date of such exercise shall be deemed the
                  "Product Opt-Out Point" for such Profit-Sharing Product;

            (b)   if the Party that is not the Opt-Out Party elects to become
                  the Continuing Party for such Profit-Sharing Product, such
                  Profit-Sharing Product will be deemed a Royalty-Bearing
                  Product, the provisions of Section 12.3 shall apply to such
                  Royalty-Bearing Product, and the Continuing Party shall be
                  free to Develop, Manufacture and Commercialize such
                  Royalty-Bearing Product in the Field in the Territory, with or
                  without a partner or collaborator and without any further
                  obligation to the Opt-Out Party with respect to such
                  activities under this Agreement, subject to the continuing
                  obligations of the Parties with respect to Royalty-Bearing
                  Products set forth in Article 6 and Sections 8.1.3.2 and
                  8.3.2;

            (c)   if the Party that is not the Opt-Out Party does not elect to
                  become the Continuing Party for such Profit-Sharing Product,
                  the definition of Ophthalmic Product shall thereafter be
                  narrowed to exclude such product and the financial, license
                  and other terms of this Agreement shall no longer apply to
                  such product or the Development, Manufacture and
                  Commercialization of such product;

            (d)   the exclusivity provisions of Section 2.13 shall continue to
                  apply to the applicable Program Target for such product (but
                  not the product itself) until a Party has exercised its Target
                  Opt-Out Right with respect to such Program Target, or the
                  Parties have exercised their Product Opt-Out Rights with
                  respect to each Ophthalmic Product in the Program for such
                  Program Target; and

            (e)   the licenses granted to the Opt-Out Party by the Continuing
                  Party with respect to such Ophthalmic Product set forth in
                  Article 7 shall terminate and the licenses granted to the
                  Continuing Party by the Opt-Out Party with respect to such
                  Ophthalmic Product set forth in Article 7 shall continue in
                  full force and effect.

5.    COMMERCIALIZATION AND MANUFACTURE OF PROFIT-SHARING PRODUCTS

      The rights and obligations set forth in this Article 5 shall apply to both
      Parties, as applicable, in respect of each Profit-Sharing Product.


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<PAGE>
      5.1   JOINT COMMERCIALIZATION COMMITTEE. Within [**]following the earliest
            Co-Promotion Option Exercise Date, the Parties will establish a
            Joint Commercialization Committee ("JCC") to oversee
            Commercialization activities in the United States relating to
            Profit-Sharing Products. The JCC will be chaired by MERCK and shall
            be comprised of three (3) named representatives of MERCK and three
            (3) named representatives of ALNYLAM. Each Party shall appoint its
            respective representatives to the JCC from time to time, and may
            substitute one or more of its representatives, in its sole
            discretion, effective upon notice to the other Party of such change.
            All JCC representatives shall have appropriate marketing or
            commercialization expertise and ongoing familiarity with the
            Profit-Sharing Products. Each Party shall bear its own expenses
            relating to attendance at such meetings by its representatives. The
            responsibilities of the JCC shall include overseeing the
            Commercialization of the Profit-Sharing Product, reviewing the
            Commercialization Plan and related budget for each Profit-Sharing
            Product and facilitating implementation of such Commercialization
            Plans and other related activities; provided, however, that [**];
            provided, further, that [**]. Any disputes related to
            Commercialization budgets shall be resolved as described in Section
            3.5.2, but with the substitution of the JCC for the JSC. The meeting
            schedule and additional responsibilities of the JCC shall be
            determined upon establishment of the JCC.

      5.2   DILIGENCE. MERCK agrees to use Commercially Reasonable Efforts to
            Commercialize each Profit-Sharing Product in the Territory. Upon
            exercise by ALNYLAM of its U.S. Co-Promotion Option with respect to
            a Profit-Sharing Product, (a) the Parties agree to diligently
            collaborate in the Commercialization of such Profit-Sharing Product
            in the Field in the United States and (b) ALNYLAM agrees to use
            Commercially Reasonable Efforts to Commercialize such Profit-Sharing
            Product in the United States. Except as otherwise set forth in this
            Article 5, all activities shall be undertaken by the Parties in
            accordance with the Commercialization Plan developed under Section
            5.4 and all sales shall be made under Product Trademark(s) selected
            by MERCK and approved by the JSC, using only professional sales
            representatives who are employees of the Parties, in the United
            States, or outside the United States, using professional sales
            representatives who are employees or direct independent contractors
            of MERCK.

      5.3   LEAD COMMERCIALIZATION PARTY; CERTAIN ALNYLAM RIGHTS. MERCK shall be
            responsible for developing a suitable global marketing strategy for
            each Profit-Sharing Product in the Territory and for sales
            activities, the development of marketing materials and the
            implementation of operational matters related to such activities
            including marketing, sales, supply and distribution of each
            Profit-Sharing Product in the Territory. MERCK shall be responsible
            for booking sales and shall warehouse and distribute the
            Profit-Sharing Product in the Territory. In the event that ALNYLAM
            exercises its U.S. Co-Promotion Option pursuant to Section 5.5,
            ALNYLAM shall have the right (but not the obligation) to field
            Health Science Associates in support of Profit-Sharing Products. The
            number and deployment of such Health Science Associates shall be
            detailed in the Commercialization Plan for each Profit-Sharing
            Product, and any Health Science Associates fielded by ALNYLAM shall
            be fully integrated into the efforts of MERCK's Health Science
            Associates. Regardless of whether ALNYLAM has exercised its U.S.
            Co-Promotion Option, the Parties shall mutually agree (such
            agreement not to be


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<PAGE>
            unreasonably withheld) upon the participation of key opinion leaders
            and/or investigators from time to time in meetings with investors
            sponsored by ALNYLAM.

      5.4   COMMERCIALIZATION PLAN. Prior to [**] a Profit-Sharing Product,
            MERCK shall prepare a statement of interest with respect to such
            Profit-Sharing Product for submission to the JSC. The statement of
            interest shall provide general marketing guidance, and shall contain
            [**]in the therapeutic area targeted by such Profit-Sharing Product.
            After submission of the statement of interest, but prior to
            submission of the marketing needs report to the JSC as described
            below, routine documents prepared by MERCK's marketing group to
            support the Development of such Profit-Sharing Product shall be
            submitted to the JSC as they become available. [**] with respect to
            such Profit-Sharing Product, MERCK shall prepare a marketing needs
            report for submission to the JSC. The marketing needs report will
            highlight the [**] for such Profit-Sharing Product and outline
            [**]such Profit-Sharing Product. Thereafter on an annual basis
            (until such time as such responsibility shifts to the JCC pursuant
            to Section 5.1), MERCK shall prepare a rolling multiyear (not less
            than [**] year) plan (a "Commercialization Plan") for
            Commercializing such Profit-Sharing Product in the Field in the
            United States. The initial Commercialization Plan for such
            Profit-Sharing Product shall include [**] The subsequent
            Commercialization Plan will contain greater detail with respect to
            Commercialization activities in the United States with respect to
            such Profit-Sharing Product and shall contain increasing levels of
            detail regarding the foregoing matters in each yearly update. Such
            subsequent Commercialization Plan is expected to include, without
            limitation, [**] for the Profit-Sharing Product. The
            Commercialization Plan shall also include, as an appendix, a budget
            for [**] in and for the United States after the First Commercial
            Sale of the relevant Profit-Sharing Product in the United States.

      5.5   U.S. CO-PROMOTION OPTION FOR PROFIT-SHARING PRODUCTS. Except in the
            event that ALNYLAM has exercised its Expense Share Reduction Option
            with respect to a Profit-Sharing Product, ALNYLAM shall have the
            option to Co-Promote such Profit-Sharing Product with MERCK in the
            United States (the "U.S. Co-Promotion Option"), which option shall
            be exercisable at any time (the "Co-Promotion Option Exercise
            Date"), but no later than [**] prior to the target launch date for
            such Profit-Sharing Product in the United States. If ALNYLAM
            exercises the U.S. Co-Promotion Option, the Parties' respective
            Co-Promotion responsibilities in the United States shall be [**]
            prior to the target launch date for such Profit-Sharing Product in
            the United States. Such [**] terms substantially similar to those
            set forth in Schedule 5.5.

      5.6   MANUFACTURE. [**] shall be responsible for the Manufacture and
            supply of each Profit-Sharing Product for Commercialization
            purposes. [**] shall have the right to Manufacture the
            Profit-Sharing Product or have the Profit-Sharing Product
            Manufactured by an Affiliate or Third Party; provided that [**]
            shall remain at all times fully liable for the Manufacture of the
            Profit-Sharing Product. In the event that [**] uses a Third Party to
            fulfill its obligations hereunder, such Third Party shall be bound
            by confidentiality and non-use obligations which are no less
            stringent than those set forth in Article 9 of this Agreement.


                                       31
<PAGE>
      5.7   MANUFACTURING REGULATORY COMMUNICATIONS RELATING TO SUPPLY OF
            PROFIT-SHARING PRODUCTS [**]. Notwithstanding any provisions of
            Section 2.10.3 to the contrary, with respect to all regulatory
            issues related to the Manufacture of Profit-Sharing Products [**],
            including all matters relating to cGMP compliance, [**] (i) oversee,
            monitor and coordinate all regulatory actions, communications and
            filings with, and submissions to, each Regulatory Authority, (ii) be
            responsible for interfacing, corresponding and meeting with each
            Regulatory Authority, (iii) be responsible for maintaining all
            regulatory filings, (iv) [**] as soon as possible, but in any event
            within [**] business days, of any action by a Regulatory Authority
            in Canada, the European Union, Japan or the United States that would
            prohibit the marketing or the continued marketing of such
            Profit-Sharing Product or that would result in any shortage or
            projected shortage of such Profit-Sharing Product and (v) [**] a
            written report once per Calendar Quarter of all material
            communications with any Regulatory Authority in Canada, the European
            Union, Japan and the United States.

      5.8   REGULATORY COORDINATION; REPORTING ADVERSE EXPERIENCES; COMPLIANCE.
            The Commercialization and Manufacture of Profit-Sharing Products
            shall be subject to the provisions of Sections 2.10.5 and 2.10.6. In
            addition, except with respect to regulatory issues related to the
            Manufacture of Profit-Sharing Products for Phase III Study,
            Post-Approval Study or Commercialization purposes, which are the
            subject of Section 5.7, the Commercialization of Profit-Sharing
            Products shall be subject to the provisions of Section 2.10.3.

6.    DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION OF ROYALTY-BEARING
      PRODUCTS.

      The rights and obligations set forth in this Article 6 shall apply to the
      Continuing Party with respect to the Development, Manufacture and
      Commercialization of each Royalty-Bearing Product.

      6.1   DEVELOPMENT AND COMMERCIALIZATION. Upon designation of a
            Royalty-Bearing Product pursuant to Section 4.2, the Continuing
            Party shall be solely responsible for all Development and
            Commercialization activities relating to such Royalty-Bearing
            Product and shall bear one hundred percent (100%) of all expenses
            for the Development, Manufacture and Commercialization of such
            Royalty-Bearing Product incurred after the Opt-Out Point and the JSC
            and JCC shall cease to have oversight or management responsibility
            with respect to such Royalty-Bearing Product.

      6.2   DEVELOPMENT AND DILIGENCE BY THE CONTINUING PARTY. After the Opt-Out
            Point, the Continuing Party shall use Commercially Reasonable
            Efforts to Develop and Commercialize the Royalty-Bearing Product.
            All Development and Commercialization activities with respect to
            such Royalty-Bearing Product shall be conducted at the Continuing
            Party's sole cost and expense and in accordance with all applicable
            laws, rules and regulations, including without limitation current
            governmental regulations concerning good laboratory practices, good
            clinical practices and good manufacturing practices.


                                       32
<PAGE>
      6.3   REPORTS FOR ROYALTY-BEARING PRODUCTS. After the Opt-Out Point, the
            Continuing Party shall prepare and deliver to the Opt-Out Party, by
            no later than each November 1, a written plan that describes the
            Development and Commercialization activities to be undertaken in the
            next Calendar Year and the dates by which such activities are
            targeted to be accomplished. In addition, the Continuing Party shall
            prepare and deliver to the Opt-Out Party, by no later than each
            February 28 (for the period ending December 31 of the prior Calendar
            Year), written reports which shall update any prior report filed
            hereunder, including a summary of the Continuing Party's Development
            and Commercialization activities performed to date, as applicable.
            The Continuing Party shall provide the Opt-Out Party with written
            notice of (i) all filings and submissions for Regulatory Approval
            regarding Royalty-Bearing Products in a timely manner; and (ii) all
            Regulatory Approvals obtained or denied within [**] days of receipt
            of written notice of such obtaining or denial; provided, however,
            that for filings and submissions for Regulatory Approval, and
            Regulatory Approvals obtained or denied, in the United States, the
            European Union, Japan, and Canada, the Continuing Party will notify
            the Opt-Out Party as soon as reasonably possible, but in any event
            within [**] business days of the Continuing Party's receipt of
            notice of such filing or submission for Regulatory Approval, or of
            the obtaining or denial of such Regulatory Approval, as the case may
            be. At the Opt-Out Party's reasonable request from time to time and
            without unduly burdening the Continuing Party, the Continuing Party
            shall also provide such other information and shall agree to meet
            with the Opt-Out Party as needed (but not more than once each year)
            to keep the Opt-Out Party reasonably informed of the Continuing
            Party's Development and Commercialization activities.

      6.4   CLINICAL AND COMMERCIAL SUPPLY. In the event that [**] with respect
            to a Royalty-Bearing Product [**] Manufacture and supply such
            Royalty-Bearing Product [**] after the applicable Opt-Out Point or
            such earlier time as may be agreed[**]. In the event that [**] with
            respect to a Royalty-Bearing Product [**] Manufacture and supply
            such Royalty-Bearing Product to [**] for [**] after such Opt-Out
            Point or such earlier time as may be agreed[**]; provided that [**]
            such Royalty-Bearing Product [**]The Continuing Party shall
            pay[**]the Opt-Out Party for any such Royalty-Bearing Product
            supplied pursuant to this Section 6.4 at the Cost of Goods Sold of
            such Royalty-Bearing Product.

      6.5   REGULATORY APPROVALS. Notwithstanding anything to the contrary
            contained in Section 2.10, after the Opt-Out Point for a
            Royalty-Bearing Product, the Continuing Party shall be the holder of
            all Regulatory Approvals (including IND and NDA submissions) for
            such Royalty-Bearing Product. To the extent permitted by law, the
            Opt-Out Party will assign to the Continuing Party, as soon as
            practical after the Opt-Out Point, all regulatory filings related to
            such Royalty-Bearing Product to the extent requested by the
            Continuing Party, including any draft IND documents, and copies of
            all correspondence and notes of any oral communication with
            Regulatory Authorities regarding such Royalty-Bearing Product. The
            Opt-Out Party will execute such further instruments, documents or
            certificates, as may be required to more effectively assign the
            regulatory filings to the Continuing Party. To the extent the
            Opt-Out Party cannot transfer all such Regulatory Approvals, the
            Opt-Out Party shall permit the Continuing Party to use and
            cross-reference such regulatory filings.


                                       33
<PAGE>
      6.6     MANUFACTURING REGULATORY COMMUNICATIONS RELATING TO
              ROYALTY-BEARING PRODUCTS. Notwithstanding any provisions of
              Section 2.10.3 or Section 2.10.4 to the contrary, with respect to
              all Manufacturing issues related to Royalty-Bearing Products,
              including all matters relating to cGMP compliance, the Continuing
              Party shall (i) oversee, monitor and coordinate all regulatory
              actions, communications and filings with, and submissions to, each
              Regulatory Authority, (ii) be responsible for interfacing,
              corresponding and meeting with each Regulatory Authority and (iii)
              be responsible for maintaining all regulatory filings.

      6.7     CONTINUATION OF LICENSES GRANTED UNDER IN-LICENSES. With respect
              to In-Licenses of the Opt-Out Party that Cover the applicable
              Royalty-Bearing Product, the Opt-Out Party will determine whether
              (i) such In-Licenses may be assigned to the Continuing Party
              subject to Third Party consent(s) and (ii) the Opt-Out Party's
              interest in retaining certain rights to exploit products other
              than such Royalty-Bearing Product. If the Opt-Out Party determines
              that such In-Licenses are assignable, the Opt-Out Party will
              assign such In-Licenses to the Continuing Party subject to any
              Third Party consents. With respect to such In-Licenses which are
              not assignable, the Opt-Out Party shall maintain these licenses
              for the duration of the sublicense granted by the Opt-Out Party to
              the Continuing Party under this Agreement. All amounts payable
              with respect to such non-assignable In-Licenses shall be shared by
              the Opt-Out Party and the Continuing Party in proportion to the
              rights being utilized by the Opt-Out Party and the Continuing
              Party under such In-Licenses; provided that all amounts allocable
              to the rights sublicensed to the Continuing Party shall be paid by
              the Opt-Out Party subject to reimbursement by the Continuing Party
              pursuant to Section 8.3.6. Such sublicense shall remain in full
              force and effect under the terms of this Agreement so long as the
              Continuing Party complies with all obligations relevant to such
              In-Licenses.

      6.8     TECHNOLOGY TRANSFER. For a period of [**] the applicable Opt-Out
              Point, each Party shall provide to the other Party, at such other
              Party's request, any and all Know-How related to the
              Royalty-Bearing Products necessary for the other Party to perform
              its obligations or exploit its rights under this Agreement. Such
              technology transfer shall include, but not be limited to,
              technical assistance. The costs and expenses directly related to
              such provision of Know-How and technical assistance shall be
              calculated in accordance with the provisions related to
              Development Expenses and Commercialization Expenses, as
              applicable, and shall be borne equally by the Opt-Out Party and
              the Continuing Party. Each Party shall use such Know-How of the
              other Party solely for the purposes of performing its obligations
              or exploiting its rights under this Agreement with respect to the
              Royalty-Bearing Products.

7.    LICENSES

      7.1     LICENSE GRANTS.

      7.1.1   PROFIT-SHARING PRODUCTS.

      7.1.1.1 DEVELOPMENT LICENSES. Subject to the terms and conditions of this
              Agreement, solely for the purpose of conducting each Program,
              ALNYLAM hereby grants MERCK a co-


                                       34
<PAGE>
              exclusive (with ALNYLAM), royalty-free license under ALNYLAM
              Technology to Develop Profit-Sharing Products in the Field in the
              Territory. Subject to the terms and conditions of this Agreement,
              solely for the purpose of conducting each Program, MERCK hereby
              grants ALNYLAM a co-exclusive (with MERCK), royalty-free license
              under MERCK Technology to Develop Profit-Sharing Products in the
              Field in the Territory. Such licenses shall include the right for
              both Parties to grant sublicenses and licenses as provided in
              Section 7.2 below.

      7.1.1.2 COMMERCIALIZATION LICENSES. Subject to the terms and conditions of
              this Agreement, including without limitation ALNYLAM's U.S.
              Co-Promotion Option set forth in Section 5.5, ALNYLAM hereby
              grants MERCK a license under ALNYLAM Technology to Commercialize
              Profit-Sharing Products in the Field. Such license shall be
              exclusive in the United States with respect to each Profit-Sharing
              Product, unless ALNYLAM exercises its U.S. Co-Promotion Option, in
              which case such license shall be co-exclusive (with ALNYLAM). Such
              license shall be exclusive and royalty-bearing in the Territory
              outside the United States. Subject to the terms and conditions of
              this Agreement, upon ALNYLAM's exercise of its U.S. Co-Promotion
              Option, MERCK hereby grants ALNYLAM a co-exclusive (with MERCK)
              license under MERCK Technology to Commercialize Profit-Sharing
              Products in the Field in the United States. Such licenses shall
              include the right for both Parties to grant sublicenses and
              licenses as provided in Section 7.2 below.

      7.1.1.3 MANUFACTURING LICENSES. Subject to the terms and conditions of
              this Agreement, only as permitted and solely for the purposes set
              forth in Sections [**] ALNYLAM hereby grants MERCK a non-exclusive
              license under ALNYLAM Technology to Manufacture Profit-Sharing
              Products in the Field for the Territory. Subject to the terms and
              conditions of this Agreement, only as permitted and solely for the
              purposes set forth in Sections [**] MERCK hereby grants ALNYLAM a
              non-exclusive license under MERCK Technology to Manufacture
              Profit-Sharing Products in the Field for the Territory. Such
              licenses shall include the right for both Parties to grant
              sublicenses and licenses as provided in Section 7.2 below.

      7.1.1.4 PRODUCT TRADEMARK LICENSES. Subject to the terms and conditions of
              this Agreement, upon ALNYLAM's exercise of its U.S. Co-Promotion
              Option with respect to a Profit-Sharing Product, MERCK hereby
              grants ALNYLAM a co-exclusive license (with MERCK) to use the
              Product Trademark(s) selected by MERCK and approved by the JSC for
              such Profit-Sharing Product to Commercialize such Profit-Sharing
              Product in the Field in the United States. Furthermore, in the
              event that MERCK makes public use of Product Trademark(s) in the
              Development of a Profit-Sharing Product, MERCK shall grant ALNYLAM
              a co-exclusive license (with MERCK) to use such Product
              Trademark(s) to perform its Development obligations under this
              Agreement with respect to such Profit-Sharing Product. Such
              licenses shall include the right for both Parties to grant
              sublicenses and licenses as provided in Section 7.2 below.

      7.1.2   ROYALTY-BEARING PRODUCTS. Subject to the terms and conditions of
              this Agreement, in relation to each Royalty-Bearing Product, the
              Opt-Out Party hereby grants the Continuing Party a license under
              ALNYLAM Technology or MERCK Technology, as


                                       35
<PAGE>
            the case may be, to Develop, Manufacture and Commercialize such
            Royalty-Bearing Product in the Field in the Territory. Such license
            shall be exclusive and royalty-bearing for the royalty term of such
            Royalty-Bearing Product as set forth in Section 8.3.3 in each
            country in the Territory, and shall thereafter be a non-exclusive,
            royalty-free license to Develop, Manufacture and Commercialize such
            Royalty-Bearing Product in the Field in such country. Such licenses
            shall include the right to grant sublicenses and licenses as
            provided in Section 7.2 below.

      7.1.3 BROAD RNAI TECHNOLOGY LICENSE. Subject to the rights granted each
            Party under this Agreement and the obligations set forth in Section
            2.13, each Party (the "Granting Party") hereby grants the other
            Party a non-exclusive, royalty-free license, with the right to grant
            sublicenses, under ALNYLAM Collaboration IP or MERCK Collaboration
            IP (collectively, "Collaboration IP") Controlled by the Granting
            Party comprising Broad RNAi Technology for the purpose of research,
            development, manufacture, use, import, or sale of RNAi Products;
            provided, that with respect to target validation and/or target
            identification research, neither Party shall have the right to
            provide any Third Party as part of a research collaboration with
            Collaboration IP Controlled by the other Party comprising Broad RNAi
            Technology, nor to use such Collaboration IP Controlled by the other
            Party comprising Broad RNAi Technology on behalf of any Third Party
            except in a collaboration whose primary purpose is the development
            of RNAi Products, and if Broad RNAi Technology is developed within
            such collaboration for use in target validation and/or target
            identification, then it may only be developed in the course of
            developing such RNAi Products.

      7.2   SUBLICENSES AND LICENSES OF JOINT COLLABORATION IP.

      7.2.1 AFFILIATES. Each Party shall be entitled to grant sublicenses of its
            rights under this Agreement (and licenses under any Joint
            Collaboration IP) to its Affiliates for so long as such entity
            remains an Affiliate.

      7.2.2 PROFIT-SHARING PRODUCTS. With respect to Profit-Sharing Products,
            each Party shall be entitled to grant sublicenses of its rights
            under Section 7.1.1 (and licenses under any Joint Collaboration IP)
            in connection with its activities under a Program Workplan or
            Commercialization Plan to academic collaborators, and contract
            service organizations, that in each case are approved by the JSC in
            accordance with Section 2.6 to perform its obligations under such
            Program Workplan or Commercialization Plan.

      7.2.3 ROYALTY-BEARING PRODUCTS. Subject to the terms of Section 7.2.5, the
            Continuing Party shall be entitled to grant sublicenses of its
            rights under this Agreement (and licenses under any Joint
            Collaboration IP) with respect to Royalty-Bearing Products to Third
            Parties to Develop and Commercialize such Royalty-Bearing Products.
            The Continuing Party shall notify the Opt-Out Party following the
            grant of any such sublicense or license, as the case may be.

      7.2.4 MANUFACTURING SUBLICENSES. Subject to the terms of Section 7.2.5,
            each Party entitled to Manufacture Ophthalmic Products under the
            terms and conditions of this Agreement shall be entitled to grant
            sublicenses of its rights under this Agreement (and licenses


                                       36
<PAGE>
            under any Joint Collaboration IP) to Third Parties to Manufacture
            such Ophthalmic Products; provided, that such Party shall remain
            primarily responsible with respect to such sublicense. Each such
            sublicense with respect to a Profit-Sharing Product shall require
            the approval of the JSC or JCC, as applicable. Each such sublicense
            with respect to a Royalty-Bearing Product shall be discussed between
            the Parties for a period of up to [**]; provided, however, that the
            Continuing Party may thereafter grant such sublicense in its sole
            discretion.

      7.2.5 TERMS. Each sublicense granted by a Party pursuant to Section 7.2.3
            or Section 7.2.4 shall be subject and subordinate to the terms and
            conditions of this Agreement and shall contain terms and conditions
            consistent with those in this Agreement. Agreements with any
            Commercializing Sublicensee shall contain the following provisions:
            (a) a requirement that such Sublicensee submit applicable sales or
            other reports consistent with those required hereunder; (b) an audit
            requirement similar to the requirement set forth in Section 8.4; and
            (c) a requirement that such Sublicensee comply with the
            confidentiality and non-use provisions of Article 9 with respect to
            both Parties' Information.

      7.2.6 LIABILITY. Each Party shall at all times be responsible for the
            performance of its Sublicensees under this Agreement.

      7.3   JOINT COLLABORATION IP. Subject to the rights granted each Party
            under this Agreement and the obligations set forth in Section 2.13,
            each Party shall have the right to use, sell, keep, license or
            assign its interest in Joint Collaboration IP and otherwise
            undertake all activities a sole owner might undertake with respect
            to such Joint Collaboration IP without the consent of and without
            accounting to the other Party.

      7.4   IN-LICENSES. All licenses and other rights granted MERCK under this
            Article 7 are subject to the rights granted ALNYLAM under the
            ALNYLAM In-Licenses. All licenses and other rights granted ALNYLAM
            under this Article 7 are subject to the rights granted MERCK under
            the MERCK In-Licenses.

      7.5   CERTAIN PATENT RIGHTS. Notwithstanding anything to the contrary
            herein, the licenses[**]to ALNYLAM Patent Rights hereunder initially
            shall[**]provided that if any such Patent Rights in-licensed
            by[**]ALNYLAM[**], as the case may be, [**] shall be amended
            accordingly.

      7.6   NO OTHER RIGHTS. Except as otherwise expressly provided in this
            Agreement, under no circumstances shall a Party hereto, as a result
            of this Agreement, obtain any ownership interest or other right in
            any Know-How or Patent Rights of the other Party, including items
            owned, controlled or developed by the other Party, or provided by
            the other Party to the receiving Party at any time pursuant to this
            Agreement.

8.    PAYMENTS; ROYALTIES AND REPORTS

      8.1   PAYMENTS.


                                       37
<PAGE>
      8.1.1   INITIAL PAYMENT. Within fifteen (15) business days following the
              Effective Date, MERCK shall pay ALNYLAM a non-refundable,
              non-creditable initial payment of [**] Dollars ($[**]).

      8.1.2   DEVELOPMENT EXPENSE REIMBURSEMENT. Within fifteen (15) business
              days following the Effective Date, MERCK shall pay ALNYLAM a
              non-refundable, non-creditable payment of [**] Dollars ($[**]) as
              reimbursement for development expenses incurred by ALNYLAM prior
              to the Effective Date with respect to the VEGF Program.

8.1.3 MILESTONE FEES.

      8.1.3.1 PROFIT-SHARING PRODUCTS. MERCK shall make the non-refundable,
              non-creditable milestone payments to ALNYLAM set forth below no
              later than thirty (30) calendar days after the earliest date on
              which the corresponding milestone event has been achieved with
              respect to the first Profit-Sharing Product in each Program to
              achieve such milestone event.

<TABLE>
<CAPTION>
Milestone Event                                                  Payment
---------------                                                  -------
<S>                                                              <C>
Initiation of IND-Enabling GLP Toxicology Studies                 $[**]

Submission of IND                                                 $[**]
</TABLE>

      8.1.3.2 ROYALTY-BEARING PRODUCTS.

              (a)   If (i) MERCK has exercised its Product Opt-Out Right during
                    the [**] Opt-Out Period with respect to an Ophthalmic
                    Product [**] and ALNYLAM is the Continuing Party with
                    respect to such Royalty-Bearing Product, or (ii) ALNYLAM has
                    exercised its Product Opt-Out Right during the [**] Opt-Out
                    Period with respect to an Ophthalmic Product [**] and MERCK
                    is the Continuing Party with respect to such Royalty-Bearing
                    Product, then the Continuing Party shall make a
                    non-refundable, non-creditable milestone payment to the
                    Opt-Out Party in the amount of $[**] no later than twenty
                    (20) business days after the earliest date on which the
                    first NDA Filing for such Royalty-Bearing Product has been
                    achieved.

              (b)   If either Party has exercised its Product Opt-Out Right with
                    respect to an Ophthalmic Product in any Program during the
                    [**] Opt-Out Period and the other Party is the Continuing
                    Party with respect to such Royalty-Bearing Product, then the
                    Continuing Party shall make the non-refundable,
                    non-creditable milestone payments to the Opt-Out Party set
                    forth below no later than twenty (20) business days after
                    the earliest date on which the corresponding milestone event
                    has been achieved for the first time with respect to such
                    Royalty-Bearing Product.


                                       38
<PAGE>
<TABLE>
<CAPTION>
                         MILESTONE EVENT                     PAYMENT
                         ---------------                     -------
<S>                                                          <C>
                         Initiation of Phase III Study        $[**]
                         First NDA Filing                     $[**]
</TABLE>

      8.2   U.S. OPERATING PROFIT/LOSS FOR PROFIT-SHARING PRODUCTS. The Parties
            shall share equally the U.S. Operating Profit/Loss for all
            Profit-Sharing Products; provided, however, that if a Party
            exercises its Expense Share Reduction Option pursuant to Section
            2.11.1 to reduce its percentage share of U.S. Development Expenses
            with respect to a Profit-Sharing Product, the Parties' percentage
            shares of the U.S. Operating Profit/Loss for such Profit-Sharing
            Product shall be the same as their respective percentage shares of
            U.S. Development Expenses as adjusted pursuant to the Expense Share
            Reduction Option.

            "U.S. Operating Profit/Loss" shall be calculated for each
            Profit-Sharing Product by determining Net Sales of such
            Profit-Sharing Product in the relevant time period in the United
            States and by then subtracting the Commercialization Expenses
            accrued by either Party in respect of such Profit-Sharing Product in
            the relevant time period in the United States.

            Within sixty (60) days after submission of the first
            Commercialization Plan for such Profit-Sharing Product to the JCC,
            the Parties will discuss and agree upon the procedures for
            reporting, reconciliation and payments with respect to U.S.
            Operating Profit/Loss.

      8.3   ROYALTIES.

      8.3.1 ROYALTIES PAYABLE ON PROFIT-SHARING PRODUCTS. Subject to the terms
            and conditions of this Agreement, MERCK shall pay to ALNYLAM
            royalties on aggregate Net Sales in the Territory outside the United
            States of each Profit-Sharing Product by MERCK or its Related
            Parties as follows:

<TABLE>
<CAPTION>
                       CALENDAR YEAR NET SALES OF THE
             PROFIT-SHARING PRODUCT IN THE TERRITORY OUTSIDE THE                   ROYALTY
                              UNITED STATES                              (AS A PERCENTAGE OF NET SALES)
                              -------------                              ------------------------------
<S>                                                                      <C>
                                $0 - $[**]                                          [**]%

                               $[**] - $[**]                                        [**]%

                               $[**] - $[**]                                        [**]%

                            Greater than $[**]                                      [**]%
</TABLE>


                                       39
<PAGE>
              Royalties on aggregate Net Sales of the Profit-Sharing Products in
              the Territory outside the United States in a Calendar Year shall
              be paid at the rate applicable to the portion of Net Sales within
              each of the Net Sales levels above during such Calendar Year.

      8.3.2   ROYALTIES PAYABLE ON ROYALTY-BEARING PRODUCTS. Subject to the
              terms and conditions of this Agreement, the Royalty Payor shall
              pay to the Royalty Recipient royalties on a country-by-country
              basis for Worldwide Sales of each Royalty-Bearing Product, such
              royalties to be calculated as set forth in Section 8.3.2.1.

      8.3.2.1 GENERAL PROCEDURE FOR CALCULATION OF ROYALTIES. For each scenario
              under which royalties are due from one Party to the other,
              Sections 8.3.2.2 and 8.3.2.3 set forth values for the following
              parameters: Sublicense Revenue Fraction (expressed as a
              percentage), Royalty Rate One, Royalty Rate Two, Royalty Rate
              Three and Royalty Rate Four. The values set forth for these
              parameters in Sections 8.3.2.2 and 8.3.2.3 shall be used to
              calculate the royalties due under each scenario in relation to
              each Royalty-Bearing Product, as follows:

              (a)   In the event that all of the Worldwide Sales for the
                    Royalty-Bearing Product are made by the Royalty Payor or its
                    Related Parties, the Royalty Payor shall pay the Royalty
                    Recipient royalties on Worldwide Sales as follows:

<TABLE>
<CAPTION>
                                                              ROYALTY
                        WORLDWIDE SALES         (AS A PERCENTAGE OF WORLDWIDE SALES)
                        ---------------         ------------------------------------
<S>                                             <C>
                           $0 to $[**]                    Royalty Rate One

                         $[**] to $[**]                   Royalty Rate Two

                         $[**] to $[**]                   Royalty Rate Three

                       Greater than $[**]                 Royalty Rate Four
</TABLE>

                    Royalties on Worldwide Sales in a Calendar Year shall be
                    paid at the rate applicable to the portion of Worldwide
                    Sales within each of the Worldwide Sales levels above. For
                    example, if, during a Calendar Year, Worldwide Sales were
                    equal to $[**], the royalties payable by the Royalty Payor
                    would be calculated by adding (i) the royalties with respect
                    to the first $[**] at Royalty Rate One, (ii) the royalties
                    with respect to the next $[**] at Royalty Rate Two, and
                    (iii) the royalties with respect to the final $[**] at
                    Royalty Rate Three.

              (b)   In the event that all of the Worldwide Sales for the
                    Royalty-Bearing Product are made through one or more
                    Sublicensees of the Royalty Payor, the Royalty Payor shall
                    pay the Royalty Recipient the lesser of (i) an amount equal
                    to the Sublicense Revenue Fraction multiplied by the
                    revenues received by the Royalty Payor from its Sublicensees
                    in relation to such Worldwide Sales, and (ii) the amounts
                    that would be due pursuant to Section 8.3.2.1(a) if all
                    Worldwide Sales had been made directly by the Royalty Payor
                    or its Related Parties, without a Sublicensee.


                                       40
<PAGE>
              (c)   In the event that some of the Worldwide Sales for the
                    Royalty-Bearing Product are made directly by the Royalty
                    Payor or its Related Parties, and some of the Worldwide
                    Sales for the Royalty-Bearing Product, in one or more
                    countries, are made through one or more Sublicensee(s), the
                    royalties to be paid by the Royalty Payor to the Royalty
                    Recipient shall be calculated as follows:

                    (i)   The fraction of Worldwide Sales that were made in each
                          country shall be determined by dividing Country Sales
                          in such country by Worldwide Sales (such fraction, the
                          "Country Fraction" for such country).

                    (ii)  For each country:

                          a. "Level One Limit" shall be calculated by
                          multiplying the Country Fraction for such country by
                          $[**];

                          b. "Level Two Threshold" shall be calculated by adding
                          one dollar to "Level One Limit";

                          c. "Level Two Limit" shall be calculated by
                          multiplying the Country Fraction for such country by
                          $[**];

                          d. Level Three Threshold" shall be calculated by
                          adding one dollar to "Level Two Limit"; and

                          e. "Level Three Limit" shall be calculated by
                          multiplying the Country Fraction for such country by
                          $[**].

                    (iii) For each country in the Territory in which Country
                          Sales are made by the Royalty Payor or its Related
                          Parties and not by a Sublicensee, the Royalty Payor
                          shall pay the Royalty Recipient royalties as follows:

<TABLE>
<CAPTION>
                                                                             ROYALTY
                                                                  (AS A PERCENTAGE OF COUNTRY
                 COUNTRY SALES IN COUNTRY IN THE TERRITORY                    SALES)
                 -----------------------------------------                    ------
<S>                                                               <C>
                  $0 to Level One Limit for such country                  Royalty Rate One

              Level Two Threshold to Level Two Limit for such             Royalty Rate Two
                                  country

            Level Three Threshold to Level Three Limit for such          Royalty Rate Three
                                  country

              Greater than Level Three Limit for such country             Royalty Rate Four
</TABLE>


                          Royalties on Country Sales of the Royalty-Bearing
                          Products in each country in the Territory in a
                          Calendar Year shall be paid at the rate applicable to
                          the portion of Country Sales within each of the
                          Country Sales levels above during such Calendar Year.
                          For example, if, during a


                                       41
<PAGE>
                          Calendar Year, Country Sales of a Royalty-Bearing
                          Product were equal to $[**], and the Level One Limit
                          is $[**], the Level Two Limit is $[**], and the Level
                          Three Limit is $[**], then the royalties payable by
                          the Royalty Payor would be calculated by adding (i)
                          the royalties with respect to the first $[**] at
                          Royalty Rate One, (ii) the royalties with respect to
                          the next $[**] at Royalty Rate Two, (iii) the
                          royalties with respect to the next $[**] at Royalty
                          Rate Three, and (iv) the royalties with respect to the
                          final $[**] at Royalty Rate Four.

                    (iv)  For each country in which Country Sales are made
                          through one or more Sublicensees of the Royalty-Payor,
                          the Royalty Payor shall pay the Royalty Recipient the
                          lesser of (x) an amount equal to the Sublicense
                          Revenue Fraction multiplied by the revenues received
                          by the Royalty Payor from its Sublicensees in relation
                          to such Country Sales, and (y) the amounts that would
                          be due pursuant to Section 8.3.2.1(c)(iii) if such
                          Country Sales had been made directly by the Royalty
                          Payor or its Related Parties, without a Sublicensee.

      8.3.2.2 ALNYLAM IS THE CONTINUING PARTY FOR [**]. If MERCK has exercised
              its Product Opt-Out Right with respect to [**] and ALNYLAM is the
              Continuing Party with respect to such Royalty-Bearing Product that
              is [**] then ALNYLAM shall be the Royalty Payor, MERCK shall be
              the Royalty Recipient, and

              (a)   If such exercise by MERCK of its Product Opt-Out Right
                    occurred during the [**] Opt-Out Period, then

                    (i)   The Sublicense Revenue Fraction shall be [**] percent
                          ([**]%);

                    (ii)  Royalty Rate One shall be [**] percent ([**]%);

                    (iii) Royalty Rate Two shall be [**] percent ([**]%);

                    (iv)  Royalty Rate Three shall be [**] percent ([**]%); and

                    (v)   Royalty Rate Four shall be [**] percent ([**]%).

              (b)   If such exercise by MERCK of its Product Opt-Out Right
                    occurred during the [**] Opt-Out Period, then

                    (i)   The Sublicense Revenue Fraction shall be [**] percent
                          ([**]%);

                    (ii)  Royalty Rate One shall be [**] percent ([**]%);

                    (iii) Royalty Rate Two shall be [**] percent ([**]%);

                    (iv)  Royalty Rate Three shall be [**] percent ([**]%); and

                    (v)   Royalty Rate Four shall be [**] percent ([**]%).


                                       42
<PAGE>
               (c)  If such exercise by MERCK of its Product Opt-Out Right
                    occurred during the [**] Opt-Out Period, then

                    (i)   The Sublicense Revenue Fraction shall be [**] percent
                          ([**]%);

                    (ii)  Royalty Rate One shall be [**] percent ([**]%);

                    (iii) Royalty Rate Two shall be [**] percent ([**]%);

                    (iv)  Royalty Rate Three shall be [**] percent ([**]%); and

                    (v)   Royalty Rate Four shall be [**] percent ([**]%).

      8.3.2.3  ALNYLAM IS THE CONTINUING PARTY FOR AN OPHTHALMIC PRODUCT [**] OR
               MERCK IS THE CONTINUING PARTY FOR AN OPHTHALMIC PRODUCT [**] If
               (x) MERCK has exercised its Product Opt-Out Right with respect to
               an Ophthalmic Product [**] and ALNYLAM is the Continuing Party
               with respect to such Royalty-Bearing Product, or (y) ALNYLAM has
               exercised its Product Opt-Out Right with respect to an Ophthalmic
               Product [**] and MERCK is the Continuing Party with respect to
               such Royalty-Bearing Product, then the Continuing Party shall be
               the Royalty Payor and the Opt-Out Party shall be the Royalty
               Recipient, and

               (a)   If such exercise by MERCK or ALNYLAM of its Product Opt-Out
                     Right occurred during the [**] Opt-Out Period, then

                     (i)   The Sublicense Revenue Fraction shall be [**] percent
                           (40%);

                     (ii)  Royalty Rate One shall be [**] percent ([**]%);

                     (iii) Royalty Rate Two shall be [**] percent ([**]%);

                     (iv)  Royalty Rate Three shall be [**] percent ([**]%); and

                     (v)   Royalty Rate Four shall be [**] percent ([**]%).

               (b)   If such exercise by MERCK or ALNYLAM of its Product Opt-Out
                     Right occurred during the [**] Opt-Out Period, then

                     (i)   The Sublicense Revenue Fraction shall be [**] percent
                           ([**]%);

                     (ii)  Royalty Rate One shall be [**] percent ([**]%);

                     (iii) Royalty Rate Two shall be [**] percent ([**]%);

                     (iv)  Royalty Rate Three shall be [**] percent ([**]%); and

                     (v)   Royalty Rate Four shall be [**] percent ([**]%).

               (c)   If such exercise by MERCK or ALNYLAM of its Product Opt-Out
                     Right occurred during the [**] Opt-Out Period, then


                                       43
<PAGE>
                     (i)   The Sublicense Revenue Fraction shall be [**]percent
                           ([**]%);

                     (ii)  Royalty Rate One shall be [**] percent ([**]%);

                     (iii) Royalty Rate Two shall be [**] percent ([**]%);

                     (iv)  Royalty Rate Three shall be [**] percent ([**]%); and

                     (v)   Royalty Rate Four shall be [**] percent ([**]%).

      8.3.2.4  EITHER PARTY IS CONTINUING PARTY AFTER EXERCISE OF TARGET OPT-OUT
               RIGHTS. If either Party exercises its Target Opt-Out Right with
               respect to a Program Target, and the other Party elects to be the
               Continuing Party with respect to any Ophthalmic Product in the
               Program for such Program Target, then such Ophthalmic Product
               shall be deemed to be a Royalty-Bearing Product and (a) with
               respect to the Royalty-Bearing Product in such Program that is at
               the most advanced stage of Development (the "Lead Royalty-Bearing
               Product"), the Royalty Payor shall pay the Royalty Recipient
               royalties calculated as set forth in Section 8.3.2.3 for Product
               Opt-Out Rights exercised during the Opt-Out Period in which the
               Target Opt-Out Point occurred, or if the Target Opt-Out Point did
               not occur in an Opt-Out Period, then for the exercise of Product
               Opt-Out Rights during the Opt-Out Period most recently preceding
               the Target Opt-Out Point; and (b) with respect to all other
               Royalty-Bearing Products in such Program, the Royalty Payor shall
               pay the Royalty Recipient [**] percent ([**]%) of the amount of
               royalties calculated as set forth in Section 8.3.2.3 for the
               exercise of Product Opt-Out Rights during the [**]Opt-Out Period;
               provided, however, that if ALNYLAM is the Opt-Out Party, in no
               event shall the royalties payable to ALNYLAM with respect to Net
               Sales in a country for any Calendar Quarter be less than the
               amount of any royalties and any portions of milestones or other
               payments under the Existing ALNYLAM In-Licenses that are
               reasonably allocable to the Commercialization or Manufacture of
               the Profit-Sharing Product in or for such country in the Field.

      8.3.3    ROYALTY TERM. Royalties on each Ophthalmic Product at the rates
               set forth in Section 8.3.1 and 8.3.2 shall be effective as of the
               date of First Commercial Sale of such Ophthalmic Product in a
               country and shall continue until the later of (a) the expiration
               of the last Valid Claim covering the Manufacture or
               Commercialization of the Ophthalmic Product in the country of
               sale, or (b) [**] anniversary of the First Commercial Sale in
               such country, subject to the following conditions:

               (a)   only one royalty shall be due with respect to the same unit
                     of Ophthalmic Product;

               (b)   no royalties shall be due upon the sale or other transfer
                     among a Party or its Related Parties, but in such cases the
                     royalty shall be due and calculated upon the Party's or its
                     Related Party's Net Sales to the first independent Third
                     Party;

               (c)   no royalties shall accrue on the sale or other disposition
                     of the Ophthalmic Product by the Parties or their Related
                     Parties for use in a Clinical Trial; and


                                       44
<PAGE>
               (d)   no royalties shall accrue on the disposition of Ophthalmic
                     Product in reasonable quantities by a Party or its Related
                     Parties as samples (promotion or otherwise) or as donations
                     (for example, to non-profit institutions or government
                     agencies for a non-commercial purpose).

      8.3.4    CHANGE IN SALES PRACTICES. The Parties acknowledge that during
               the Agreement Term, a Royalty Payor's sales practices for the
               marketing and distribution of an Ophthalmic Product may change to
               the extent to which the calculation of the payment for royalties
               on Net Sales may become impractical or even impossible. In such
               event the Parties agree to meet and discuss in good faith new
               ways of compensating the Royalty Recipient to the extent
               currently contemplated under this Section 8.3.

      8.3.5    COMPULSORY LICENSES. If a compulsory license is granted to a
               Third Party with respect to an Ophthalmic Product in any country
               in the Territory with a royalty rate lower than the applicable
               royalty rate set forth in this Section 8.3, then the royalty rate
               to be paid by the Royalty Payor on Net Sales in that country
               under this Section 8.3 shall be reduced to the rate paid by the
               compulsory licensee.

      8.3.6    NECESSARY THIRD PARTY IP.

      8.3.6.1  PROFIT-SHARING PRODUCTS. If the Development, Manufacture or
               Commercialization of a Profit-Sharing Product by a Party in
               accordance with this Agreement infringes Necessary Third Party IP
               then:

               (a)   The amount of any portions of milestones or other payments
                     paid by either Party under all In-Licenses of such
                     Necessary Third Party IP that are reasonably allocable to
                     the Development of the Profit-Sharing Product in the Field
                     (i) in the United States, shall be included in the U.S.
                     Development Expenses for such Profit-Sharing Product and
                     shared by the Parties pursuant to Section 2.11, and (ii) in
                     the Territory outside the United States, shall be borne by
                     MERCK.

               (b)   The amount of any royalties and any portions of milestones
                     or other payments paid by either Party under all
                     In-Licenses of such Necessary Third Party IP that are
                     reasonably allocable to the Commercialization or
                     Manufacture of the Profit-Sharing Product in or for the
                     United States in the Field, shall be Commercialization
                     Expenses for purposes of calculating U.S. Operating
                     Profit/Loss for such Profit-Sharing Product pursuant to
                     Section 8.2.

               (c)   The applicable royalties in each country in the Territory
                     outside the United States payable by MERCK to ALNYLAM
                     pursuant to Section 8.3.1 will be (i) reduced by [**]
                     percent ([**]%) of the amount paid by MERCK and (ii)
                     increased by [**] percent ([**]%) of the amount paid by
                     ALNYLAM, in each case, of any royalties and any portions of
                     milestones or other payments under all In-Licenses of such
                     Necessary Third Party IP that are reasonably allocable to
                     the Commercialization or Manufacture of the Profit-Sharing
                     Product in or for such country in the Field; provided,
                     however, that, on a country-by-country basis, in no event
                     shall the royalties payable to ALNYLAM with respect to Net
                     Sales in a


                                       45
<PAGE>
                     country for any Calendar Quarter be reduced below the
                     greater of (x) [**]percent ([**]%) of the royalties
                     otherwise payable by MERCK to ALNYLAM for such Calendar
                     Quarter as calculated pursuant to Section 8.3.1 or (y) the
                     amount of any royalties and any portions of milestones or
                     other payments under the Existing ALNYLAM In-Licenses that
                     are reasonably allocable to the Commercialization or
                     Manufacture of the Profit-Sharing Product in or for such
                     country in the Field.

      8.3.6.2  ROYALTY-BEARING PRODUCTS. If the Development, Manufacture or
               Commercialization of a Royalty-Bearing Product by a Continuing
               Party in accordance with this Agreement infringes Necessary Third
               Party IP, the applicable royalties in each country in the
               Territory payable to the Opt-Out Party pursuant to Section
               8.3.2.1 will be (a) reduced by [**] percent ([**]%) of the amount
               paid by the Continuing Party and (b) increased by [**] percent
               ([**]%) of the amount paid by the Opt-Out Party (and not already
               reimbursed by the Continuing Party pursuant to Section 6.7), in
               each case, of any royalties and any portions of milestones or
               other payments under all In-Licenses of such Necessary Third
               Party IP that are reasonably allocable to the Development,
               Manufacture and Commercialization of the Royalty-Bearing Product
               in or for such country in the Field; provided, however, that, on
               a country-by-country basis, in no event shall the royalties
               payable to the Opt-Out Party with respect to Net Sales in a
               country for any Calendar Quarter be reduced below the greater of
               (i) [**] percent ([**]%) of the royalties otherwise payable by
               the Continuing Party to the Opt-Out Party for such Calendar
               Quarter as calculated pursuant to Section 8.3.2 or (ii) if
               ALNYLAM is the Opt-Out Party, the amount of any royalties and any
               portions of milestones or other payments under the Existing
               ALNYLAM In-Licenses that are reasonably allocable to the
               Commercialization or Manufacture of the Profit-Sharing Product in
               or for such country in the Field.

      8.3.7    BLENDED ROYALTY RATES. The Parties acknowledge and agree that the
               Patent Rights and Know-How licensed pursuant to this Agreement
               justify royalty rates of differing amounts with respect to the
               sales of Ophthalmic Products, which rates could be applied
               separately to Ophthalmic Products involving the exercise of such
               Patent Rights and/or the incorporation of such Know-How, and
               that, if such royalties were calculated separately, royalties
               relating to Patent Rights and royalties relating to Know-How
               would last for different terms. Notwithstanding the foregoing,
               the Parties have determined, for reasons of convenience, that
               blended royalty rates for the Patent Rights and the Know-How
               licensed hereunder, as set forth above, will apply during a
               single royalty term. The Parties acknowledge and agree that
               nothing in this Agreement (including without limitation any
               exhibits or attachments hereto) shall be construed as
               representing an estimate or projection of either (a) the number
               of Ophthalmic Products that will or may be successfully Developed
               or Commercialized or (b) anticipated sales or the actual value of
               any Ophthalmic Product, and that the figures set forth in this
               Section 8.3 or elsewhere in this Agreement or that have otherwise
               been discussed by the Parties are merely intended to define the
               Parties' royalty payment obligations to each other in the event
               such sales performance is achieved.

                                       46
<PAGE>
      8.3.8 REPORTS; PAYMENT OF ROYALTY. During the Agreement Term, commencing
            upon the First Commercial Sale of each Ophthalmic Product, the
            Royalty Payor shall furnish to the Royalty Recipient (a) a monthly
            written report showing the estimated quantity of each Ophthalmic
            Product sold in each country (as measured in grams of active
            pharmaceutical ingredient or saleable units of product, as the
            Parties may agree) and the Net Sales of such Ophthalmic Product in
            each country (and any other detail reasonably available through the
            Royalty Payor's internal sales reporting system) for the previous
            month, in each case on an unaudited basis; and (b) a quarterly
            written report showing the quantity of each Ophthalmic Product sold
            in each country (as measured in grams of active pharmaceutical
            ingredient or saleable units of product, as the Parties may agree),
            the gross sales of such Ophthalmic Product in each country, total
            deductions for such Ophthalmic Product for each country included in
            the calculation of Net Sales, the Net Sales in each country of such
            Ophthalmic Product subject to royalty payments sold by the Royalty
            Payor or its Related Parties during the reporting period and the
            royalties payable under this Agreement. Quarterly reports shall be
            due no later than [**] following the close of each Calendar Quarter.
            Royalties shown to have accrued by each royalty report shall be due
            and payable on the date such royalty report is due. Each Party shall
            keep complete and accurate records in sufficient detail to enable
            the royalties and other payments payable hereunder to be determined,
            including without limitation records of the items underlying U.S.
            Development Expenses and U.S. Operating Profit/Loss.

      8.4   AUDITS.

      8.4.1 Upon the written request of a Party and not more than once in each
            Calendar Year, the other Party and/or its Related Parties shall
            permit an independent certified public accounting firm of
            nationally-recognized standing selected by the requesting Party and
            reasonably acceptable to the other Party, at the requesting Party's
            expense except as set forth below, to have access during normal
            business hours to such of the records of the other Party as may be
            reasonably necessary to verify the accuracy of the royalty and other
            reports hereunder for any year ending not more than [**] months
            prior to the date of such request for the sole purpose of verifying
            the basis and accuracy of payments made under Sections 2.11 and 13.2
            and this Article 8.

      8.4.2 If such accounting firm identifies a discrepancy made during such
            period, the appropriate Party shall pay the other Party the amount
            of the discrepancy within twenty (20) business days of the date the
            requesting Party delivers to the other Party such accounting firm's
            written report so concluding, or as otherwise agreed by the Parties
            in writing. Such written report shall be binding upon the Parties.
            The fees charged by such accounting firm shall be paid by the
            requesting Party, unless such discrepancy represents an underpayment
            by the other Party of the lesser of [**] U.S. dollars ($[**]) or
            [**] percent ([**]%) of the total amounts due hereunder, in which
            case such fees shall be paid by the other Party.

      8.4.3 The Royalty Payor shall include in each sublicense granted by it
            pursuant to this Agreement a provision requiring the sublicensee to
            make reports to the Royalty Payor, to keep and maintain records of
            sales made pursuant to such sublicense and to grant


                                       47
<PAGE>
            access to such records by the Royalty Recipient's independent
            accountant to the same extent required of the Royalty Payor under
            this Agreement.

      8.4.4 Unless an audit for such year has been commenced upon the expiration
            of [**] months following the end of any year, the calculation of
            royalties and other payments payable with respect to such year shall
            be binding and conclusive upon both Parties, and the Royalty Payor
            and its Related Parties shall be released from any further liability
            or accountability with respect to royalties for such year.

      8.4.5 Each Party shall treat all financial information subject to review
            under this Section 8.4 or under any sublicense agreement in
            accordance with the confidentiality and non-use provisions of this
            Agreement, and shall cause its accounting firm to enter into an
            acceptable confidentiality agreement with the other Party and/or its
            Related Parties obligating it to retain all such information in
            confidence pursuant to such confidentiality agreement.

      8.5   PAYMENT EXCHANGE RATE. All payments to be made under this Agreement
            shall be made in United States dollars and shall be paid by bank
            wire transfer in immediately available funds to such bank account in
            the United States as may be designated in writing by the receiving
            Party from time to time. In the case of sales outside the United
            States by each Party and its Related Parties, the rate of exchange
            to be used in computing the amount of currency equivalent in United
            States dollars due shall be made at the rate of exchange utilized by
            such Party in its worldwide accounting system, prevailing on the
            third to the last business day of the month preceding the month in
            which such sales are recorded.

      8.6   INCOME TAX WITHHOLDING. If laws, rules or regulations require
            withholding of income taxes or other taxes imposed upon payments set
            forth in this Article 8, the paying Party shall make such
            withholding payments as required and subtract such withholding
            payments from the payments set forth in this Article 8. The paying
            Party shall submit appropriate proof of payment of the withholding
            taxes to the receiving Party within a reasonable period of time. At
            the request of the receiving Party, the paying Party shall, at its
            cost, give the receiving Party such reasonable assistance, which
            shall include the provision of appropriate certificates of such
            deductions made together with other supporting documentation as may
            be required by the relevant tax authority, to enable the receiving
            Party to claim exemption from such withholding or other tax imposed
            or obtain a repayment thereof or reduction thereof and shall upon
            request provide such additional documentation from time to time as
            is reasonably required to confirm the payment of tax.

9.    CONFIDENTIALITY AND PUBLICATION

      9.1   NONDISCLOSURE OBLIGATION. All Information disclosed by one Party to
            the other Party hereunder shall be maintained in confidence by the
            receiving Party and shall not be disclosed to a non-Party or used
            for any purpose except as set forth herein without the prior written
            consent of the disclosing Party, except to the extent that such
            Information:

                                       48
<PAGE>
            (a)   is known by the receiving Party at the time of its receipt,
                  and not through a prior disclosure by the disclosing Party, as
                  documented by the receiving Party's business records;

            (b)   is in the public domain by use and/or publication before its
                  receipt from the disclosing Party, or thereafter enters the
                  public domain through no fault of the receiving Party;

            (c)   is subsequently disclosed to the receiving Party by a Third
                  Party who may lawfully do so and is not under an obligation of
                  confidentiality to the disclosing Party;

            (d)   is developed by the receiving Party independently of
                  Information received from the disclosing Party, as documented
                  by the receiving Party's business records;

            (e)   is deemed necessary by counsel to the receiving Party to be
                  disclosed to such Party's attorneys or independent accountants
                  for the sole purpose of enabling such attorneys or independent
                  accountants to provide advice to the receiving Party, on the
                  condition that such attorneys and independent accountants
                  agree to be bound by confidentiality and non-use obligations
                  substantially similar to those contained in this Agreement;
                  provided, however, that the term of confidentiality for such
                  attorneys and independent accountants shall be no less than
                  [**]; or

            (f)   is deemed necessary by a Party to be disclosed to Related
                  Parties, agents, consultants, and/or other Third Parties for
                  the Development, Manufacturing or Commercialization of
                  Ophthalmic Product (or for such entities to determine their
                  interest in performing such activities) in accordance with
                  this Agreement on the condition that such Third Parties agree
                  to be bound by confidentiality and non-use obligations
                  substantially similar to those contained in this Agreement
                  provided, however, that the term of confidentiality for such
                  Third Parties shall be no less than [**].

            Any combination of features or disclosures shall not be deemed to
            fall within the foregoing exclusions merely because individual
            features are published or available to the general public or in the
            rightful possession of the receiving Party unless the combination
            itself and principle of operation are published or available to the
            general public or in the rightful possession of the receiving Party.

            Notwithstanding the obligations of confidentiality and non-use set
            forth above, a receiving Party may provide Information disclosed to
            it to (i) governmental or other Regulatory Authorities in order to
            obtain patents or to gain or maintain approval to conduct Clinical
            Studies or to otherwise Develop, Manufacture or Commercialize
            Ophthalmic Products; provided, that such disclosure shall be subject
            to the prior written consent of the Party whose Information is
            intended to be disclosed (which consent shall not be unreasonably
            withheld), and such Information shall be disclosed only to the
            extent reasonably necessary to obtain patents or authorizations,
            (ii) the extent required


                                       49
<PAGE>
            by applicable law, including without limitation by the rules or
            regulations of the United States Securities and Exchange Commission
            or similar regulatory agency in a country other than the United
            States or of any stock exchange or Nasdaq, (iii) any bona fide
            actual or prospective underwriters, investors, lenders or other
            financing sources who are obligated to keep such information
            confidential, to the extent reasonably necessary to enable such
            actual or prospective underwriters, investors, lenders or other
            financing sources to determine their interest in underwriting or
            making an investment in, or otherwise providing financing to, the
            receiving Party; provided, however, that in the case of an investor
            that is a Significant Pharmaceutical Company, such disclosure shall
            be subject to the prior written consent of the Party whose
            Information is intended to be disclosed (which consent shall not be
            unreasonably withheld), and (iv) in the event that the Party seeking
            to provide Information of the other Party is the Continuing Party
            with respect to a Royalty-Bearing Product, any bona fide actual or
            prospective collaborators or strategic partners with respect to the
            Development or Commercialization of such Royalty-Bearing Product,
            who are obligated to keep such information confidential; provided,
            however, that the Party and/or its Affiliates shall only disclose to
            actual or prospective collaborators and strategic partners the
            general subject matter of this Agreement, the licenses granted
            hereunder, the provisions set forth in Section 2.13 and 13.2, the
            provisions of Articles 8, 9 and 11, and such Know-How and Patent
            Rights relating to such Royalty-Bearing Product as the receiving
            Party, in its reasonable judgment, considers necessary for such
            actual or prospective collaborators or strategic partners to
            evaluate their interest in such Royalty-Bearing Product.

            If a Party is required by judicial or administrative process to
            disclose Information that is subject to the non-disclosure
            provisions of this Section 9.1 or Section 9.2, such Party shall
            promptly inform the other Party of the disclosure that is being
            sought in order to provide the other Party an opportunity to
            challenge or limit the disclosure obligations. Information that is
            disclosed by judicial or administrative process shall remain
            otherwise subject to the confidentiality and non-use provisions of
            this Section 9.1 and Section 9.2, and the Party disclosing
            Information pursuant to law or court order shall take all steps
            reasonably practical, including without limitation seeking an order
            of confidentiality, to ensure the continued confidential treatment
            of such Information. In addition to the foregoing restrictions on
            public disclosure, if either Party concludes that a copy of this
            Agreement must be filed with the Securities and Exchange Commission,
            such Party shall provide the other Party with a copy of this
            Agreement showing any sections as to which the Party proposes to
            request confidential treatment, will provide the other Party with an
            opportunity to comment on any such proposal and to suggest
            additional portions of the Agreement for confidential treatment, and
            will take such Party's reasonable comments into consideration before
            filing the Agreement.

      9.2   PUBLICATION. MERCK and ALNYLAM each acknowledge the other Party's
            interest in publishing the results of the Development. Each Party
            also recognizes the mutual interest in obtaining valid patent
            protection and in protecting business interests and trade secret
            information. Consequently, except for disclosures permitted pursuant
            to Section 9.1, either Party, its Affiliates, or their respective
            employees or consultants wishing to make a publication or a
            disclosure to a Third Party relating to the Ophthalmic Collaboration
            or any Profit-Sharing Product shall deliver to the other Party a
            copy of the


                                       50
<PAGE>
            proposed written publication or an outline of an oral disclosure at
            least thirty (30) days prior to submission for publication or
            presentation. The reviewing Party shall have the right (a) to
            propose modifications to the publication or presentation for patent
            reasons, trade secret reasons or business reasons, or (b) to request
            a reasonable delay in publication or presentation in order to
            protect patentable information. If the reviewing Party requests a
            delay, the publishing Party shall delay submission or presentation
            for a period of sixty (60) days to enable patent applications
            protecting each Party's rights in such information to be filed in
            accordance with Article 11 below. Upon expiration of such sixty (60)
            days, the publishing Party shall be free to proceed with the
            publication or presentation. If the reviewing Party requests
            modifications to the publication or presentation, the publishing
            Party shall edit such publication to prevent disclosure of trade
            secret or proprietary business information prior to submission of
            the publication or presentation. With respect to any proposed
            publications or disclosures by investigators or academic or
            non-profit collaborators, such materials shall be subject to review
            under this Section 9.2 to the extent that MERCK or ALNYLAM, as the
            case may be, has the right and ability (after using reasonable
            efforts) to do so. For the avoidance of doubt, subject to its
            obligations under Section 9.1, the Continuing Party with respect to
            a Royalty-Bearing Product may make publications and disclosures to
            Third Parties relating to such Royalty-Bearing Product without any
            obligation to permit the Opt-Out Party to review or comment on such
            publication or disclosure. Furthermore, subject to its rights under
            Section 9.1, the Opt-Out Party with respect to a Royalty-Bearing
            Product shall have no right to make any publications and disclosures
            to Third Parties relating to such Royalty-Bearing Product.

      9.3   PUBLICITY/USE OF NAMES. No disclosure of the existence of, or the
            terms of, this Agreement may be made by either Party, and no Party
            shall use the name, trademark, trade name or logo of the other Party
            or its employees in any publicity, news release or disclosure
            relating to this Agreement or its subject matter, without the prior
            express written permission of the other Party, except as may be
            required by law or expressly permitted by the terms hereof.

            Notwithstanding the foregoing, prior to the execution of this
            Agreement by both Parties, the Parties shall agree in writing upon a
            press release to be issued jointly by the Parties publicizing the
            Ophthalmic Collaboration. After such initial press release, neither
            Party shall issue a press release or public announcement relating to
            the Ophthalmic Collaboration or this Agreement without the prior
            written approval of the other Party, which approval shall not be
            unreasonably withheld, except that a Party may (a) once a press
            release or other written statement is approved in writing by both
            Parties, make subsequent public disclosure of the information
            contained in such press release or other written statement without
            the further approval of the other Party, and (b) issue a press
            release or public announcement as required, in the reasonable
            judgment of such Party, by applicable law, including without
            limitation by the rules or regulations of the United States
            Securities and Exchange Commission or similar regulatory agency in a
            country other than the United States or of any stock exchange or
            Nasdaq, in each case after first notifying the other Party of such
            planned press release or public announcement at least seven (7)
            business days in advance of issuing such press release or making
            such public announcement (or, with respect to press releases and
            public announcements made


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            pursuant to the foregoing clause (b), with as much advance notice as
            possible under the circumstances if it is not possible to provide
            notice at least seven (7) business days in advance) for the sole
            purpose of allowing the other Party to review the proposed press
            release or public announcement for the inclusion of Confidential
            Information or the use of its name.

10.   REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

      10.1    MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party represents and
              warrants to the other Party that as of the Effective Date of this
              Agreement:

      10.1.1  It is duly-organized and validly existing under the laws of its
              jurisdiction of incorporation or formation, and has full corporate
              or other power and authority to enter into this Agreement and to
              carry out the provisions hereof.

      10.1.2  It is duly-authorized to execute and deliver this Agreement and to
              perform its obligations hereunder, and the person or persons
              executing this Agreement on its behalf has been duly-authorized to
              do so by all requisite corporate action.

      10.1.3  This Agreement is legally binding upon it and enforceable in
              accordance with its terms. The execution, delivery and performance
              of this Agreement by it does not conflict with any agreement,
              instrument or understanding, oral or written, to which it is a
              party and by which it may be bound.

      10.1.4  It has not, and will not during the Agreement Term, grant any
              right to any Third Party which would conflict with the rights
              granted to the other Party hereunder. It has (or will have at the
              time performance is due) maintained and will maintain and keep in
              full force and effect all agreements (including license
              agreements) and filings (including patent filings) necessary to
              perform its obligations hereunder.

      10.1.5  If any human primary cell lines, human tissue, human clinical
              isolates or similar human-derived materials ("Human Materials")
              have been or are to be collected and/or used in the Ophthalmic
              Collaboration, each Party represents and warrants (i) that it has
              complied, or shall comply, with all applicable laws, guidelines
              and regulations relating to the collection and/or use of the Human
              Materials, and (ii) that it has obtained, or shall obtain, all
              necessary approvals and appropriate informed consents, in writing,
              for the collection and/or use of such Human Materials. Each Party
              shall provide documentation of such approvals and consents upon
              the other Party's request. Each Party further represents and
              warrants that such Human Materials may be used as contemplated in
              this Agreement without any obligation to the individuals or
              entities ("Providers") who contributed the Human Materials,
              including without limitation any obligation of compensation to
              such Providers or any other Third Party for the intellectual
              property associated with the Human Materials or commercial use
              thereof for any purposes.

      10.1.6  Neither Party nor any of its Affiliates has been debarred or is
              subject to debarment and neither Party nor any of its Affiliates
              will use in any capacity, in connection with the Development,
              Manufacture or Commercialization of an Ophthalmic Product, any
              person


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              or entity that has been debarred pursuant to Section 306 of the
              United States Federal Food, Drug, and Cosmetic Act, or that is the
              subject of a conviction described in such section. Each Party
              agrees to inform the other Party in writing immediately if it or
              any person or entity that is performing activities under the
              Ophthalmic Collaboration is debarred or is the subject of a
              conviction described in Section 306, or if any action, suit,
              claim, investigation or legal or administrative proceeding is
              pending or, to the best of such Party's knowledge, is threatened,
              relating to the debarment or conviction of such Party or any
              person or entity used in any capacity by such Party or any of its
              Affiliates in connection with the Development, Manufacture or
              Commercialization of an Ophthalmic Product.

      10.2    ALNYLAM REPRESENTATIONS AND WARRANTIES. ALNYLAM represents and
              warrants to MERCK that as of the Effective Date of this Agreement:

      10.2.1  To the best of ALNYLAM's knowledge, the ALNYLAM Patent Rights
              exist and are not invalid or unenforceable, in whole or in part;

      10.2.2  It has not previously assigned, transferred, conveyed or otherwise
              encumbered its right, title and interest in the ALNYLAM Technology
              in a manner that conflicts with any rights granted to MERCK
              hereunder; and

      10.2.3  Except as set forth in Section 10.2.3 of Schedule 10 to this
              Agreement, there are no claims, judgments or settlements against
              or owed by ALNYLAM or its Affiliates or pending or threatened
              claims or litigation relating to the ALNYLAM Technology.

      10.3    MERCK REPRESENTATIONS AND WARRANTIES. MERCK represents and
              warrants to ALNYLAM that as of the Effective Date of this
              Agreement:

      10.3.1  To the best of MERCK's knowledge, the MERCK Patent Rights exist
              and are not invalid or unenforceable, in whole or in part;

      10.3.2  It has not previously assigned, transferred, conveyed or otherwise
              encumbered its right, title and interest in the MERCK Technology
              in a manner that conflicts with the rights granted to ALNYLAM
              hereunder; and

      10.3.3  There are no claims, judgments or settlements against or owed by
              MERCK or its Affiliates or pending or threatened claims or
              litigation relating to the MERCK Technology that are expected to
              impact the Ophthalmic Collaboration or any Ophthalmic Product.

      10.4    WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
              THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS
              ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER
              PARTY WITH RESPECT TO ANY TECHNOLOGY, OPHTHALMIC PRODUCTS, GOODS,
              SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND
              HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY,
              FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT
              TO ANY AND ALL OF


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              THE FOREGOING. EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR
              WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF
              ANY OPHTHALMIC PRODUCT PURSUANT TO THIS AGREEMENT WILL BE
              SUCCESSFUL OR THAT ANY PARTICULAR SALES LEVEL WITH RESPECT TO THE
              OPHTHALMIC PRODUCTS WILL BE ACHIEVED.

      10.5    INDEMNIFICATION.

      10.5.1  GENERAL INDEMNIFICATION BY MERCK. MERCK shall indemnify, hold
              harmless, and defend ALNYLAM, its Affiliates, and their respective
              directors, officers, employees and agents ("ALNYLAM Indemnitees")
              from and against any and all Third Party claims, suits, losses,
              liabilities, damages, costs, fees and expenses (including
              reasonable attorneys' fees) (collectively, "Losses") arising out
              of or resulting from, directly or indirectly, (a) any breach of,
              or inaccuracy in, any representation or warranty made by MERCK in
              this Agreement, or any breach or violation of any covenant or
              agreement of MERCK in or pursuant to this Agreement, or (b) the
              negligence or willful misconduct by or of MERCK, its Affiliates
              and their respective Sublicensees, and their respective directors,
              officers, employees and agents. This indemnification excludes
              Losses arising out of Third Party Infringement Claims resulting
              from MERCK's exercise in accordance with the terms of this
              Agreement of any intellectual property rights granted by ALNYLAM
              hereunder. Furthermore, MERCK shall have no obligation to
              indemnify the ALNYLAM Indemnitees to the extent that the Losses
              arise out of or result from, directly or indirectly, any breach
              of, or inaccuracy in, any representation or warranty made by
              ALNYLAM in this Agreement, or any breach or violation of any
              covenant or agreement of ALNYLAM in or pursuant to this Agreement,
              or the negligence or willful misconduct by or of any of the
              ALNYLAM Indemnitees.

      10.5.2  GENERAL INDEMNIFICATION BY ALNYLAM. ALNYLAM shall indemnify, hold
              harmless, and defend MERCK, its Affiliates and their respective
              directors, officers, employees and agents ("MERCK Indemnitees")
              from and against any and all Losses arising out of or resulting
              from, directly or indirectly, (a) any breach of, or inaccuracy in,
              any representation or warranty made by ALNYLAM in this Agreement,
              or any breach or violation of any covenant or agreement of ALNYLAM
              in or pursuant to this Agreement, or (b) the negligence or willful
              misconduct by or of ALNYLAM, its Affiliates and their respective
              Sublicensees, and their respective directors, officers, employees
              and agents. This indemnification excludes Losses arising out of
              Third Party Infringement Claims resulting from ALNYLAM's exercise
              in accordance with the terms of this Agreement of any intellectual
              property rights granted by MERCK hereunder. Furthermore, ALNYLAM
              shall have no obligation to indemnify the MERCK Indemnitees to the
              extent that the Losses arise out of or result from, directly or
              indirectly, any breach of, or inaccuracy in, any representation or
              warranty made by MERCK in this Agreement, or any breach or
              violation of any covenant or agreement of MERCK in or pursuant to
              this Agreement, or the negligence or willful misconduct by or of
              any of the MERCK Indemnitees.

      10.5.3  PRODUCT LIABILITY.

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              (a)   MERCK shall indemnify and hold harmless the ALNYLAM
                    Indemnitees from, against and in respect of any and all
                    Losses arising out of Third Party product liability claims
                    incurred or suffered by the ALNYLAM Indemnitees, or any of
                    them, directly or indirectly relating to an Ophthalmic
                    Product and resulting from or arising out of the negligence,
                    willful misconduct, or breach of this Agreement of or by
                    MERCK or any of the other MERCK Indemnitees, except to the
                    extent caused by the negligence, willful misconduct or
                    breach of this Agreement of or by ALNYLAM or any of the
                    other ALNYLAM Indemnitees.

              (b)   ALNYLAM shall indemnify and hold harmless the MERCK
                    Indemnitees from, against and in respect of any and all
                    Losses arising out of Third Party product liability claims
                    incurred or suffered by the MERCK Indemnitees, or any of
                    them, directly or indirectly relating to an Ophthalmic
                    Product and resulting from or arising out of the negligence,
                    willful misconduct, or breach of this Agreement of or by
                    ALNYLAM or any of the other ALNYLAM Indemnitees, except to
                    the extent caused by the negligence, willful misconduct or
                    breach of this Agreement of or by MERCK or any of the other
                    MERCK Indemnitees.

              (c)   Any Losses arising out of Third Party product liability
                    claims (other than such claims entitled to indemnification
                    under Sections 10.5.3(a) or (b)) shall (i) be borne by the
                    Continuing Party, to the extent such Losses were incurred
                    with respect to the Development, Manufacture or
                    Commercialization of a Royalty-Bearing Product, (ii) be
                    included in U.S. Development Expenses and shared by the
                    Parties pursuant to Section 2.11, to the extent such Losses
                    were incurred with respect to the Development (and/or
                    related Manufacture) of a Profit-Sharing Product in the
                    United States, (iii) be included in Commercialization
                    Expenses for purposes of calculating U.S. Operating
                    Profit/Loss pursuant to Section 8.2, to the extent such
                    Losses were incurred with respect to the Commercialization
                    (and/or related Manufacture) of a Profit-Sharing Product in
                    the United States, or (iv) be borne by MERCK, to the extent
                    such Losses were incurred with respect to Development,
                    Manufacture or Commercialization of a Profit-Sharing Product
                    in the Territory outside the United States.

      10.5.4  INDEMNIFICATION PROCEDURE. In the event of any such claim against
              any MERCK Indemnitee or ALNYLAM Indemnitee (individually, an
              "Indemnitee"), the indemnified Party shall promptly notify the
              other Party in writing of the claim and the indemnifying Party
              shall manage and control, at its sole expense, the defense of the
              claim and its settlement. The Indemnitee shall cooperate with the
              indemnifying Party and may, at its option and expense, be
              represented in any such action or proceeding. The indemnifying
              Party shall not be liable for any settlements, litigation costs or
              expenses incurred by any Indemnitee without the indemnifying
              Party's written authorization. Notwithstanding the foregoing, if
              the indemnifying Party believes that any of the exceptions to its
              obligation of indemnification of the Indemnitees set forth in
              Sections 10.5.1, 10.5.2 or 10.5.3 may apply, the indemnifying
              Party shall promptly notify the Indemnitees, which shall then have
              the right to be represented in any such action or proceeding by
              separate counsel at their expense; provided, that the indemnifying
              Party shall be responsible for


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              payment of such expenses if the Indemnitees are ultimately
              determined to be entitled to indemnification from the indemnifying
              Party.

11.   INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS

      11.1    INVENTORSHIP. Inventorship for patentable inventions conceived or
              reduced to practice during the course of the performance of
              activities pursuant to this Agreement shall be determined in
              accordance with United States patent laws for determining
              inventorship.

      11.2    OWNERSHIP. ALNYLAM shall own the entire right, title and interest
              in and to all inventions and discoveries (and Patent Rights
              claiming patentable inventions therein) first made or discovered
              solely by employees or consultants of ALNYLAM or acquired solely
              by ALNYLAM in the course of conducting the Ophthalmic
              Collaboration. MERCK shall own the entire right, title and
              interest in and to all inventions and discoveries (and Patent
              Rights claiming patentable inventions therein) first made or
              discovered solely by employees or consultants of MERCK or acquired
              solely by MERCK in the course of conducting the Ophthalmic
              Collaboration. The Parties shall jointly own any inventions and
              discoveries (and Patent Rights claiming patentable inventions
              therein) first made or discovered jointly in the course of
              conducting the Ophthalmic Collaboration.

      11.3    PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.

      11.3.1  MERCK TECHNOLOGY. MERCK has the sole responsibility to, at MERCK's
              discretion, file, conduct ex parte and inter partes prosecution,
              and maintain (including the defense of any interference or
              opposition proceedings) in the Territory, all Patent Rights
              comprising MERCK Technology (other than Joint Collaboration IP),
              in MERCK's name.

      11.3.2  ALNYLAM TECHNOLOGY. ALNYLAM has the sole responsibility to, at
              ALNYLAM's discretion, file, conduct ex parte and inter partes
              prosecution, and maintain (including the defense of any
              interference or opposition proceedings) in the Territory, all
              Patent Rights comprising ALNYLAM Technology (other than Joint
              Collaboration IP), in ALNYLAM's name.

      11.3.3  JOINT COLLABORATION IP. Subject to ALNYLAM's continuing right to
              the prior review of, comment on, revision to and approval of
              material documents, which shall not be unreasonably delayed or
              withheld, MERCK has the sole responsibility to, at MERCK's
              discretion, file, conduct ex parte and inter partes prosecution,
              and maintain (including the defense of any interference or
              opposition proceedings) in the Territory, all Patent Rights
              comprising Joint Collaboration IP (other than Broad RNAi
              Technology Collaboration IP), in the names of both ALNYLAM and
              MERCK. Notwithstanding the foregoing, if ALNYLAM is the Continuing
              Party with respect to a Royalty-Bearing Product, then ALNYLAM
              shall have the sole responsibility to, at ALNYLAM's discretion,
              file, conduct ex parte and inter partes prosecution, and maintain
              (including the defense of any interference or opposition
              proceedings) in the Territory, all Patent


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              Rights comprising Joint Collaboration IP Covering, claiming or
              relating to such Royalty-Bearing Product, in the names of both
              ALNYLAM and MERCK. Each Party shall use Commercially Reasonable
              Efforts to make available to the Prosecuting Party or its
              authorized attorneys, agents or representatives, such of its
              employees as the Prosecuting Party in its reasonable judgment
              deems necessary in order to assist it in obtaining patent
              protection for such Joint Collaboration IP. Each Party shall sign,
              or use Commercially Reasonable Efforts to have signed, all legal
              documents necessary to file and prosecute patent applications or
              to obtain or maintain patents in respect of such Joint
              Collaboration IP, at no cost to the Prosecuting Party.

      11.3.4  BROAD RNAI TECHNOLOGY COLLABORATION IP. Notwithstanding Section
              11.3.3, subject to MERCK's continuing right to the prior review
              of, comment on, revision to and approval of material documents
              relating to Joint Collaboration IP, which shall not be
              unreasonably delayed or withheld, ALNYLAM has the sole
              responsibility to, at ALNYLAM's discretion, file, conduct ex parte
              and inter partes prosecution, and maintain, including the defense
              of any interference or opposition proceedings, in the Territory,
              all Patent Rights comprising Broad RNAi Technology Collaboration
              IP in the names of both ALNYLAM and MERCK. MERCK shall use
              Commercially Reasonable Efforts to make available to ALNYLAM or
              its authorized attorneys, agents or representatives, such of its
              employees as ALNYLAM in its reasonable judgment deems necessary in
              order to assist it in obtaining patent protection for such Broad
              RNAi Technology Collaboration IP. MERCK shall sign or use
              Commercially Reasonable Efforts to have signed all legal documents
              necessary to file and prosecute patent applications or to obtain
              or maintain patents in respect of such Broad RNAi Technology
              Collaboration IP, at no cost to ALNYLAM.

      11.3.5  CONTINGENT RIGHTS. The Party having the right to prosecute and
              maintain patents under Sections 11.3.1, 11.3.2, 11.3.3 and 11.3.4
              shall be referred to as the "Prosecuting Party". In the event the
              Prosecuting Party elects not to seek or continue to seek or
              maintain patent protection on any ALNYLAM Collaboration IP, MERCK
              Collaboration IP or Joint Collaboration IP which are subject to
              the other Party's licensed rights under Section 7 in the
              Territory, the other Party shall have the right (but not the
              obligation), at its expense, to prosecute and maintain in any
              country within the Territory patent protection on such ALNYLAM
              Collaboration IP, MERCK Collaboration IP or Joint Collaboration IP
              in the name of ALNYLAM, MERCK or both Parties as set forth in
              Sections 11.3.1, 11.3.2, 11.3.3 and 11.3.4. The previously
              Prosecuting Party shall use Commercially Reasonable Efforts to
              make available to the other Party or its authorized attorneys,
              agents or representatives, such of its employees as are reasonably
              necessary to assist the other Party in obtaining and maintaining
              the patent protection described under this Section 11.3.5. The
              previously Prosecuting Party shall sign or use Commercially
              Reasonable Efforts to have signed all legal documents necessary to
              file and prosecute such patent applications or to obtain or
              maintain such patents.

      11.3.6  COOPERATION. Each Party hereby agrees: (a) to make its employees,
              agents and consultants reasonably available to the other Party (or
              to the other Party's authorized attorneys, agents or
              representatives), to the extent reasonably necessary to enable
              such Party to undertake patent prosecution; (b) to provide the
              other Party with copies of all


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               material correspondence pertaining to prosecution with the patent
               offices; (c) to cooperate, if necessary and appropriate, with the
               other Party in gaining patent term extensions wherever applicable
               to Patent Rights; and (d) to endeavor in good faith to coordinate
               its efforts with the other Party to minimize or avoid
               interference with the prosecution and maintenance of the other
               Party's patent applications.

      11.3.7   PATENT EXPENSES. The patent filing, prosecution and maintenance
               expenses incurred after the Effective Date with respect to Patent
               Rights comprised of ALNYLAM Technology and MERCK Technology
               ("Patent Expenses") shall be borne by each Party having the right
               to file, prosecute and maintain such Patent Rights under this
               Section 11.3, except that Patent Expenses incurred (a) by the
               Opt-Out Party with respect to a Royalty-Bearing Product shall be
               reimbursed in full by the Continuing Party, (b) by a Party with
               respect to a Profit-Sharing Product in the United States prior to
               the First Commercial Sale of such product in the United States
               shall be included in U.S. Development Expenses for such product
               and shared by the Parties pursuant to Section 2.11, (c) by a
               Party with respect to a Profit-Sharing Product in the United
               States after the First Commercial Sale of such product in the
               United States shall be included in Commercialization Expenses for
               such product for purposes of calculating U.S. Operating
               Profit/Loss pursuant to Section 8.2, and (d) by ALNYLAM with
               respect to a Profit-Sharing Product in the Territory outside the
               United States shall be reimbursed in full by MERCK.

      11.4     THIRD PARTY INFRINGEMENT.

      11.4.1   NOTICES. Each Party shall promptly report in writing to the other
               Party during the Agreement Term any (a) known or suspected
               infringement of any ALNYLAM Technology or MERCK Technology being
               used in the Ophthalmic Collaboration, including without
               limitation any Joint Collaboration IP or (b) unauthorized use or
               misappropriation of any Information by a Third Party of which it
               becomes aware, and shall provide the other Party with all
               available evidence supporting such infringement, or unauthorized
               use or misappropriation

      11.4.2   RIGHTS TO ENFORCE.

      11.4.2.1 MERCK'S FIRST RIGHT. Subject to the provisions of Section
               11.4.2.2(b) and the provisions of any Third Party agreement under
               which MERCK's rights in MERCK Technology are granted or ALNYLAM's
               rights in ALNYLAM Technology are granted and of any In-License,
               in respect of each (a) Profit-Sharing Product in the Field in the
               Territory and (b) Royalty-Bearing Product in the Field in the
               Territory for which MERCK is the Continuing Party, MERCK shall
               have the sole and exclusive right to initiate an infringement or
               other appropriate suit anywhere in the world against any Third
               Party who at any time has infringed, or is suspected of
               infringing, any Patent Rights, or of using without proper
               authorization any Know-How, comprising (i) MERCK Technology or
               ALNYLAM Technology that is licensed to MERCK under Section 7.1
               with respect to such Profit-Sharing Product or Royalty-Bearing
               Product, as the case may be or (ii) Joint Collaboration IP
               Covering, claiming or relating to such Profit-Sharing Product or
               Royalty-Bearing Product, as the case may be.


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      11.4.2.2 ALNYLAM'S FIRST RIGHT.

               (a)   Subject to the provisions of any Third Party agreement
                     under which ALNYLAM's rights in ALNYLAM Technology or
                     MERCK's rights in MERCK Technology are granted and of any
                     In-License, in respect of each Royalty-Bearing Product in
                     the Field in the Territory for which ALNYLAM is the
                     Continuing Party, ALNYLAM shall have the sole and exclusive
                     right to initiate an infringement or other appropriate suit
                     anywhere in the world against any Third Party who at any
                     time has infringed, or is suspected of infringing, any
                     Patent Rights, or of using without proper authorization any
                     Know-How, comprising ALNYLAM Technology or MERCK Technology
                     that is licensed to ALNYLAM under Section 7.1 with respect
                     to such Royalty-Bearing Product or Joint Collaboration IP
                     Covering, claiming or relating to such Royalty-Bearing
                     Product.

               (b)   ALNYLAM shall have the sole and exclusive right to initiate
                     an infringement or other appropriate suit anywhere in the
                     world against any Third Party who at any time has
                     infringed, or is suspected of infringing, any Patent
                     Rights, or of using without proper authorization any
                     Know-How, comprising Broad RNAi Technology Collaboration
                     IP.

      11.4.3   STEP-IN RIGHTS. Subject to the provisions of any Third Party
               license agreement under which ALNYLAM's rights in ALNYLAM
               Technology are granted or MERCK's rights in MERCK Technology are
               granted, and of any In-Licenses, if the Party with the first
               right to enforce (the "Initial Enforcement Rights Party") ALNYLAM
               Technology, MERCK Technology, Joint Collaboration IP or Broad
               RNAi Technology Collaboration IP under Section 11.4.2 fails to
               initiate a suit or take other appropriate action that it has the
               initial right to initiate or take pursuant thereto within ninety
               (90) days after becoming aware of the basis for such suit or
               action, then the other Party (the "Secondary Enforcement Rights
               Party") may, in its discretion, provide the Initial Enforcement
               Rights Party with written notice of such Secondary Enforcement
               Rights Party's intent to initiate a suit or take other
               appropriate action. If the Secondary Enforcement Rights Party
               provides such notice and the Initial Enforcement Rights Party
               fails to initiate a suit or take such other appropriate action
               within thirty (30) days after receipt of such notice from the
               Secondary Enforcement Rights Party, then the Secondary
               Enforcement Rights Party shall have the right to initiate a suit
               or take other appropriate action that it believes is reasonably
               required to protect its ownership interest in and to, or licensed
               interest under, as applicable, ALNYLAM Technology and MERCK
               Technology, including without limitation, Joint Collaboration IP
               and Broad RNAi Technology Collaboration IP.

      11.4.4   PROCEDURES; EXPENSES AND RECOVERIES. The Party having the right
               to initiate any infringement suit under Section 11.4.2 above
               shall have the sole and exclusive right to select counsel for any
               such suit and shall pay all expenses of the suit, including
               attorneys' fees and court costs and reimbursement of the other
               Party's reasonable out-of-pocket expense in rendering assistance
               requested by the initiating Party, except that such expenses in
               respect of any Profit-Sharing Product in the United States (i)
               prior to


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               the First Commercial Sale of such Profit-Sharing Product in the
               United States shall be included in U.S. Development Expenses for
               such product and shared by the Parties pursuant to Section 2.11,
               and (ii) after the First Commercial Sale of such Profit Sharing
               Product in the United States shall be Commercialization Expenses
               for purposes of calculating U.S. Operating Profit/Loss pursuant
               to Section 8.2. If required under applicable law in order for the
               initiating Party to initiate and/or maintain such suit, or if
               either Party is unable to initiate or prosecute such suit solely
               in its own name or it is otherwise advisable to obtain an
               effective legal remedy, in each case, the other Party shall join
               as a party to the suit and will execute and cause its Affiliates
               to execute all documents necessary for the initiating Party to
               initiate litigation to prosecute and maintain such action. In
               addition, at the initiating Party's request, the other Party
               shall provide reasonable assistance to the initiating Party in
               connection with an infringement suit at no charge to the
               initiating Party except for reimbursement by the initiating Party
               of reasonable out-of-pocket expenses incurred in rendering such
               assistance. The non-initiating Party shall have the right to
               participate and be represented in any such suit by its own
               counsel at its own expense. If the Parties obtain from a Third
               Party, in connection with such suit, any damages, license fees,
               royalties or other compensation (including any amount received in
               settlement of such litigation), such amounts shall be allocated
               as follows:

               (a)   In all cases, to reimburse each Party for all expenses of
                     the suit, including attorneys' fees and disbursements,
                     court costs and other litigation expenses; and

               (b)   If the infringement by the Third Party is related to a
                     Profit-Sharing Product in the United States (i) prior to
                     the First Commercial Sale of the Profit-Sharing Product in
                     the United States, the balance shall be applied to
                     reimburse the Parties for U.S. Development Expenses in
                     accordance with their share of such expenses as set forth
                     in Section 2.11 and (ii) after the First Commercial Sale of
                     the Profit-Sharing Product in the United States, the
                     balance shall be deemed Net Sales for the purpose of
                     calculating U.S. Operating Profit/Loss for such
                     Profit-Sharing Product pursuant to Section 8.2; or

               (c)   If the infringement by the Third Party is related to a
                     Profit-Sharing Product in the Territory outside the United
                     States, the remaining amount shall be treated as if it were
                     Net Sales of MERCK, with ALNYLAM receiving a royalty on
                     such remaining amount pursuant to the terms of Section
                     8.3.1, and the balance being retained by MERCK; or

               (d)   If the infringement by the Third Party is related to a
                     Royalty-Bearing Product, the remaining amount shall be
                     treated as if it were Net Sales of the Continuing Party,
                     with the other Party receiving a royalty on such remaining
                     amount pursuant to the terms of Section 8.3.2, and the
                     balance being retained by the Continuing Party.

      11.5     CLAIMED INFRINGEMENT.


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      11.5.1  NOTICE. In the event that a Third Party at any time provides
              written notice of a claim to, or brings an action, suit or
              proceeding against, any Party, or any of their respective
              Affiliates or Sublicensees, claiming infringement of its patent
              rights or unauthorized use or misappropriation of its know-how,
              based upon an assertion or claim arising out of the Development,
              Manufacture or Commercialization of Ophthalmic Products in the
              Field in the Territory ("Infringement Claim"), such Party shall
              promptly notify the other Party of the claim or the commencement
              of such action, suit or proceeding, enclosing a copy of the claim
              and all papers served. Each Party agrees to make available to the
              other Party its advice and counsel regarding the technical merits
              of any such claim at no cost to the other Party and to offer
              reasonable assistance to the other Party at no cost to the other
              Party.

      11.5.2  PROFIT-SHARING PRODUCTS. Any Infringement Claim brought against
              either Party or its Affiliates or Sublicensees arising out of the
              Development, Manufacture or Commercialization of any
              Profit-Sharing Product in the Field in the Territory, shall be
              defended by MERCK if it so desires; provided, however, that
              ALNYLAM shall defend any such Infringement Claim relating to Broad
              RNAi Technology, if it so desires. All litigation costs and
              expenses incurred by the Defending Party (defined below) in
              connection with such Infringement Claim, and all damages, payments
              and other amounts awarded against, or payable by, either Party
              under any settlement with such Third Party (a) with respect to the
              United States (i) prior to the First Commercial Sale of the
              Profit-Sharing Product in the United States, shall be U.S.
              Development Expenses for such Profit-Sharing Product as set forth
              in Section 2.11 and (ii) after the First Commercial Sale of the
              Profit-Sharing Product in the United States, shall be
              Commercialization Expenses for purposes of calculating U.S.
              Operating Profit/Loss in respect of such Profit-Sharing Product
              pursuant to Section 8.2, and (b) with respect to the Territory
              outside the United States, shall be borne by MERCK.

      11.5.3  ROYALTY-BEARING PRODUCTS. In respect of any Royalty-Bearing
              Product, the applicable Continuing Party shall assume full
              responsibility for any Infringement Claims brought against either
              Party or its Affiliates or Sublicensees arising out of the
              Development, Manufacture or Commercialization of such
              Royalty-Bearing Product. All liabilities, damages, costs and
              expenses arising out of such Third Party Infringement Claims shall
              be borne by the Continuing Party.

      11.5.4  PROCEDURE. The Party having the initial right to defend an
              Infringement Claim shall be referred to as the "Defending Party."
              The Defending Party shall have the sole and exclusive right to
              select counsel for any Infringement Claim; provided, that it shall
              consult with the other Party with respect to selection of counsel
              for such defense. The Defending Party shall keep the other Party
              informed, and shall from time to time consult with the other Party
              regarding the status of any such claims and shall provide the
              other Party with copies of all documents filed in, and all written
              communications relating to, any suit brought in connection with
              such claims. The other Party shall also have the right to
              participate and be represented in any such claim or related suit,
              at its own expense. The other Party shall have the sole and
              exclusive right to control the defense of an Infringement Claim in
              the event the Defending Party fails to exercise its right to
              assume such defense within thirty (30) days following written
              notice from the other


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              Party of such Infringement Claim. No Party shall settle any claims
              or suits involving rights of another Party without obtaining the
              prior written consent of such other Party, which consent shall not
              be unreasonably withheld.

      11.5.5  LIMITATIONS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ARTICLE 10,
              THE FOREGOING STATES THE ENTIRE RESPONSIBILITY OF ALNYLAM AND
              MERCK, AND THE SOLE AND EXCLUSIVE REMEDY OF ALNYLAM OR MERCK, AS
              THE CASE MAY BE, IN THE CASE OF ANY CLAIMED INFRINGEMENT OF ANY
              THIRD PARTY PATENT RIGHTS OR UNAUTHORIZED USE OR MISAPPROPRIATION
              OF ANY THIRD PARTY'S KNOW-HOW.

      11.6    OTHER INFRINGEMENT RESOLUTIONS. In the event of a dispute or
              potential dispute that has not ripened into a demand, claim or
              suit of the types described in Sections 11.4 and 11.5 of this
              Agreement (e.g., actions seeking declaratory judgments and
              revocation proceedings), the same principles governing control of
              the resolution of the dispute, consent to settlements of the
              dispute, and implementation of the settlement of the dispute
              (including the sharing in and allocating the payment or receipt of
              damages, license fees, royalties and other compensation) shall
              apply.

      11.7    PRODUCT TRADEMARKS.

      11.7.1  OWNERSHIP OF PRODUCT TRADEMARKS. MERCK shall own the Product
              Trademarks for Profit-Sharing Products in the Territory and shall
              be responsible for filing and maintaining the Product Trademarks
              in the Territory (including payment of costs associated
              therewith), subject to reimbursement of such costs in the United
              States as Commercialization Expenses for purposes of calculating
              U.S. Operating Profit/Loss for such Profit-Sharing Product
              pursuant to Section 8.2. Each Party shall have the right to
              monitor the quality of such products in accordance with reasonable
              procedures to be agreed upon by the Parties. The Continuing Party
              shall own the Product Trademarks for Royalty-Bearing Products and
              shall be solely responsible for filing and maintaining the Product
              Trademarks in the Territory (including payment of costs associated
              therewith). Promptly after exercising its Opt-Out Right with
              respect to such Royalty-Bearing Product, MERCK shall assign to
              ALNYLAM all Product Trademarks for such Royalty-Bearing Product
              Controlled by MERCK in accordance with terms and conditions to be
              negotiated by the Parties in good faith.

      11.7.2  THIRD PARTY INFRINGEMENT.

              (a)   PROFIT-SHARING PRODUCTS. In the event that either Party
                    becomes aware of any infringement of a Product Trademark for
                    a Profit-Sharing Product by a Third Party, it shall promptly
                    notify the other and the Parties shall consult with each
                    other and jointly determine the best way to prevent such
                    infringement, including without limitation by the
                    institution of legal proceedings against such Third Party.
                    All out-of-pocket costs, including attorneys' fees, relating
                    to such legal proceedings incurred (a) with respect to the
                    United States (i) prior to the First Commercial Sale of the
                    Profit-Sharing Product in the United States shall be


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                    included in U.S. Development Expenses for such
                    Profit-Sharing Product and shared by the Parties pursuant to
                    Section 2.11 and (ii) after the First Commercial Sale of the
                    Profit-Sharing Product in the United States shall be
                    included in Commercialization Expenses for purposes of
                    calculating U.S. Operating Profit/Loss for such
                    Profit-Sharing Product pursuant to Section 8.2 and (b) in
                    the Territory outside the United States shall be borne
                    solely by MERCK.

              (b)   ROYALTY-BEARING PRODUCTS. The applicable Continuing Party
                    shall assume full responsibility, at its sole cost and
                    expense, for any infringement of a Product Trademark for a
                    Royalty-Bearing Product by a Third Party.

      11.7.3  CLAIMED INFRINGEMENT. If a Third Party challenges the Parties'
              right to commercialize a Profit-Sharing Product under the selected
              Product Trademark, the JSC shall consider the grounds for such
              challenge and recommend to MERCK a course of action in the
              affected market based on an assessment of the legal merits of such
              Third Party claim. The foregoing procedure shall also be followed
              in the event of an objection to the selected Product Trademark
              raised by a Regulatory Authority. In the case of a Royalty-Bearing
              Product, the Continuing Party will defend and indemnify the
              Opt-Out Party for and against any claims of infringement of the
              rights of a Third Party by the use of a Product Trademark in
              connection with such Royalty-Bearing Product.

      11.8    PATENT TERM EXTENSIONS. The Parties shall use reasonable efforts
              to obtain all available supplementary protection certificates
              ("SPC") and other extensions of Patent Rights (including those
              available under the Hatch-Waxman Act). Each Party shall execute
              such authorizations and other documents and take such other
              actions as may be reasonably requested by the other Party to
              obtain such extensions. The Parties shall cooperate with each
              other in gaining patent term restorations, extensions and/or SPCs
              wherever applicable to Patent Rights. The Party first eligible to
              seek patent term restoration or extension of any such Patent
              Rights or any SPC related thereto shall have the right to do so;
              provided, that if in any country the first Party has an option to
              extend the patent term for only one of several patents, the first
              Party shall consult with the other Party before making the
              election. If more than one patent is eligible for extension or
              patent term restoration, the JSC shall agree upon a strategy that
              shall maximize patent protection and commercial value for
              Ophthalmic Products. All filings for such extensions and
              certificates shall be made by the Party to whom responsibility for
              prosecution and maintenance of the Patent Rights are assigned,
              provided, that in the event that the Party to whom such
              responsibility is assigned elects not to file for an extension or
              SPC, such Party shall (i) inform the other Party of its intention
              not to file and (ii) grant the other Party the right to file for
              such extension or SPC in the patentee's name and such Party shall
              provide all necessary assistance in connection therewith.

      11.9    PATENT CERTIFICATION. To the extent required by law or permitted
              by law, the Parties shall use Commercially Reasonable Efforts to
              maintain with the applicable Regulatory Authorities during the
              Agreement Term correct and complete listings of applicable Patent
              Rights for Ophthalmic Products being commercialized, including all
              so called "Orange Book" listings required under the Hatch-Waxman
              Act.


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12.   TERM AND TERMINATION

      12.1    TERM AND EXPIRATION.

      12.1.1  EXPIRATION OF OPHTHALMIC COLLABORATION. The Ophthalmic
              Collaboration shall commence on the Effective Date and expire on
              the date on which no Profit-Sharing Products are being Developed
              or Commercialized by the Parties. Expiration of the Ophthalmic
              Collaboration shall only affect the terms, responsibilities and
              activities undertaken in accordance with the Ophthalmic
              Collaboration and shall not affect the other terms of this
              Agreement.

      12.1.2  TERMINATION OF AGREEMENT. This Agreement shall be effective as of
              the Effective Date and, unless terminated earlier pursuant to
              Section 12.2 below, this Agreement shall continue in effect until
              expiration of all royalty obligations hereunder ("Agreement
              Term"). Upon expiration of the Agreement Term, all licenses of the
              Parties under Article 7 then in effect shall become fully paid-up,
              perpetual, non-exclusive licenses.

      12.2    TERMINATION FOR CAUSE.

      12.2.1  CAUSE FOR TERMINATION. This Agreement may be terminated at any
              time during the Agreement Term:

              (a)   upon written notice by either Party (the "Non-Breaching
                    Party") if the other Party (the "Breaching Party") is in
                    breach of its material obligations hereunder by causes and
                    reasons within its control and has not cured such breach
                    within ninety (90) days after notice requesting cure of the
                    breach; provided, however, in the event of a good faith
                    dispute with respect to the existence of a material breach,
                    the ninety (90) day cure period shall be tolled until such
                    time as the Dispute is resolved pursuant to Section 13.6
                    hereof; or

              (b)   by either Party upon the filing or institution of
                    bankruptcy, reorganization, liquidation or receivership
                    proceedings, or upon an assignment of a substantial portion
                    of the assets for the benefit of creditors by the other
                    Party; provided, however, that in the event of any
                    involuntary bankruptcy or receivership proceeding such right
                    to terminate shall only become effective if the Party
                    consents to the involuntary bankruptcy or receivership or
                    such proceeding is not dismissed within ninety (90) days
                    after the filing thereof.

      12.2.2  EFFECT OF TERMINATION FOR CAUSE.

              (a)   MATERIAL BREACH RELATING TO THE DEVELOPMENT OR
                    COMMERCIALIZATION OF A ROYALTY-BEARING PRODUCT. If the
                    material breach has, or is reasonably likely to have, a
                    material adverse effect on the Development, Manufacture or
                    Commercialization of a Royalty-Bearing Product in a Region
                    or Regions, then this Agreement shall not terminate in its
                    entirety, nor with respect to such Royalty-Bearing Product
                    in the Territory outside of such Region(s), provided that
                    with respect to such Region(s):


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                    (i)   except to the extent such licenses are necessary for
                          the Breaching Party to perform its obligations under
                          clause (iii) below, the licenses granted to the
                          Breaching Party under this Agreement with respect to
                          the Development, Manufacture and Commercialization of
                          such Royalty-Bearing Product in such Region(s) shall
                          terminate;

                    (ii)  the Breaching Party hereby grants to the Non-Breaching
                          Party an exclusive (even as to the Breaching Party),
                          non-royalty-bearing perpetual license under ALNYLAM
                          Technology if the Breaching Party is ALNYLAM, or under
                          MERCK Technology, if the Breaching Party is MERCK, to
                          Develop, Manufacture and Commercialize such
                          Royalty-Bearing Product in the Field in such
                          Region(s); provided, however, that to the extent such
                          license to a Party's Technology includes a sublicense
                          under Necessary Third Party IP, including without
                          limitation the Existing ALNYLAM In-Licenses, the
                          non-Breaching Party shall be fully responsible for all
                          royalties, milestones or other payments under such
                          In-Licenses reasonably allocable to such
                          Royalty-Bearing Product in such Region(s);

                    (iii) in the event that the Breaching Party is Manufacturing
                          and supplying the Royalty-Bearing Product pursuant to
                          Section 6.4, the Breaching Party shall have the
                          obligation, if requested by the Non-Breaching Party,
                          to continue to Manufacture and supply the
                          Royalty-Bearing Product for such Region(s) in
                          accordance with, and for the time period described in,
                          Section 6.4; and

                    (iv)  in the event that the Non-Breaching Party is
                          Manufacturing and supplying the Royalty-Bearing
                          Product pursuant to Section 6.4, the Breaching Party
                          shall have the obligation to reimburse the
                          Non-Breaching Party for any committed and
                          non-refundable or non-creditable costs or expenses
                          incurred by the Non-Breaching Party, as of the date of
                          notice of termination, with respect to the supply of
                          such Royalty-Bearing Product for the Breaching Party
                          for such Region(s), and shall purchase, at the Cost of
                          Goods Sold, any Royalty-Bearing Product Manufactured
                          and supplied by the Non-Breaching Party for such
                          Region(s), as well as any work in progress, raw
                          materials, intermediates or components relating to the
                          Royalty-Bearing Product, in each case in accordance
                          with, and for the time period described in Section
                          6.4.

              (b)   MATERIAL BREACH RELATING TO THE DEVELOPMENT OR
                    COMMERCIALIZATION OF A PROFIT-SHARING PRODUCT. If the
                    material breach has, or is reasonably likely to have, a
                    material adverse effect on the Development, Manufacture or
                    Commercialization of a Profit-Sharing Product in a Region or
                    Regions, then this Agreement shall not terminate in its
                    entirety, nor with respect to such Profit-Sharing Product in
                    the Territory outside of such Region(s), provided that with
                    respect to such Region(s):


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                    (i)   the licenses granted to the Breaching Party under this
                          Agreement with respect to the Development, Manufacture
                          and Commercialization of such Profit-Sharing Product
                          in such Region(s) shall terminate;

                    (ii)  the licenses granted to the Non-Breaching Party by the
                          Breaching Party with respect to such Profit-Sharing
                          Product in such Region(s) pursuant to Article 7 shall
                          continue in full force and effect;

                    (iii) the Non-Breaching Party shall have the right to
                          Develop, Manufacture and Commercialize such
                          Profit-Sharing Product in the Field in such Region(s),
                          either alone or in collaboration with Third Parties,
                          without any financial obligation to the Breaching
                          Party; provided, however, that to the extent the
                          licenses in Section 12.2.2(b)(ii) include a sublicense
                          under Necessary Third Party IP, including without
                          limitation the Existing ALNYLAM In-Licenses, the
                          non-Breaching Party shall be fully responsible for all
                          royalties, milestones or other payments under such
                          In-Licenses reasonably allocable to such
                          Profit-Sharing Product in such Region(s); and

                    (iv)  the exclusivity covenant in Section 2.13 shall not
                          apply to the Non-Breaching Party with respect to the
                          applicable Program in such Region(s).

              (c)   TERMINATION UPON BANKRUPTCY OF A PARTY. If this Agreement is
                    terminated by either Party (the "Non-Bankrupt Party")
                    pursuant to Section 12.2.1(b) due to the rejection of this
                    Agreement by or on behalf of the other Party (the "Bankrupt
                    Party") under Section 365 of the United States Bankruptcy
                    Code (the "Code"), all licenses and rights to licenses
                    granted under or pursuant to this Agreement by the Bankrupt
                    Party to the Non-Bankrupt Party are, and shall otherwise be
                    deemed to be, for purposes of Section 365(n) of the Code,
                    licenses of rights to "intellectual property" as defined
                    under Section 101(35A) of the Code. The Parties agree that
                    the Non-Bankrupt Party, as a licensee of such rights under
                    this Agreement, shall retain and may fully exercise all of
                    its rights and elections under the Code, and that upon
                    commencement of a bankruptcy proceeding by or against the
                    Bankrupt Party under the Code, the Non-Bankrupt Party shall
                    be entitled to a complete duplicate of, or complete access
                    to (as the Non-Bankrupt Party deems appropriate), any such
                    intellectual property and all embodiments of such
                    intellectual property. Such intellectual property and all
                    embodiments thereof shall be promptly delivered to the
                    Non-Bankrupt Party (i) upon any such commencement of a
                    bankruptcy proceeding upon written request therefor by the
                    Non-Bankrupt Party, unless the Bankrupt Party elects to
                    continue to perform all of its obligations under this
                    Agreement or (ii) if not delivered under (i) above, upon the
                    rejection of this Agreement by or on behalf of the Bankrupt
                    Party upon written request therefor by the Non-Bankrupt
                    Party. The foregoing provisions are without prejudice to any
                    rights the Non-Bankrupt Party may have arising under the
                    Code or other applicable law.

              (d)   For purposes of this Article 12, "Region" shall mean any of
                    the following regions in the Territory: (i) the United
                    States; (ii) the European Union, (iii) the


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                    region comprised of the following countries: Australia,
                    Bangladesh, Bhutan, Brunei, Darussalam, Burma, Cambodia,
                    China (including Hong Kong), India, Indonesia, Japan, Laos,
                    Macao, Malaysia, Mongolia, Nepal, New Zealand, Papua New
                    Guinea, Pakistan, Philippines, Republic of Korea, Singapore,
                    Sri Lanka, Taiwan, Thailand and Vietnam; and (iv) the region
                    comprised of the countries of the world not included in
                    clauses (i), (ii) or (iii) above.

      12.3    OTHER CONSEQUENCES OF TERMINATION OR THE EXERCISE OF OPT-OUT
              RIGHTS.

      12.3.1  OTHER CONSEQUENCES OF TERMINATION. For purposes of this Section
              12.3.1, "Transferring Party" shall mean the Breaching Party or the
              Opt-Out Party, as the case may be, and "Receiving Party" shall
              mean the Non-Breaching Party or the Continuing Party, as the case
              may be. In addition to the consequences set forth in Sections 4.3,
              4.4 and 12.2 and without limiting any other legal or equitable
              remedies that a Party may have, in the event of a termination
              pursuant to Section 12.2 with respect to the Region(s) to which
              such termination applies, or upon the exercise by a Party of its
              Opt-Out Rights pursuant to Sections 4.3 or 4.4:

              (a)   with respect to each Ophthalmic Product that is the subject
                    of the material breach or the exercise of an Opt-Out Right,
                    the Transferring Party shall:

                    (i)   promptly provide, or cause to be provided, to the
                          Receiving Party all Know-How it Controls that pertains
                          to the applicable Ophthalmic Product not previously
                          provided by it to the Receiving Party reasonably
                          necessary for the practice of the license rights
                          granted to such other Party under this Agreement;

                    (ii)  promptly transfer, or cause to be transferred, to the
                          Receiving Party, subject to the completion of the
                          on-going Clinical Studies under subsection (c) below,
                          as applicable, all [**];

                    (iii) promptly transfer, or cause to be transferred, to the
                          Receiving Party any and all tangible manifestations
                          and embodiments of the other Party's Know-How and
                          other materials provided by it pursuant to this
                          Agreement in respect of such Ophthalmic Product
                          (provided that in the event of termination pursuant to
                          Section 12.2, such transfer shall only be to the
                          extent necessary to enable the Receiving Party to
                          exercise its rights with respect to the terminated
                          Region(s));

                    (iv)  promptly assign, or cause to be assigned, to the
                          Receiving Party upon the Receiving Party's request,
                          any Third Party agreements to which the Transferring
                          Party is a party, to the extent such agreements relate
                          to the Development, Manufacture or Commercialization
                          of the applicable Ophthalmic Product (in the
                          terminated Region(s), in the event of termination
                          pursuant to Section 12.2);

              (b)   The Breaching Party will allow the Non-Breaching Party, [**]
                    (with respect to the terminated Region(s), in the event of
                    termination pursuant to Section 12.2), or if this is not
                    reasonably practicable, the Breaching Party will [**]. At
                    the option of the Non-Breaching Party, the Breaching Party
                    will assign to the Non-


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                    Breaching Party, [**] (with respect to the terminated
                    Region(s), in the event of termination pursuant to Section
                    12.2), to the extent legally permissible; and

              (c)   The Transferring Party will cooperate in any reasonable
                    manner requested by the Receiving Party to achieve a smooth
                    transition of the development, manufacturing, marketing and
                    sales of the Ophthalmic Product to it or its licensees as
                    contemplated by Section 4.3, 4.4 or 12.2, as applicable,
                    such as transfer of its Know-How relating to Manufacturing
                    and assistance in connection with regulatory matters
                    relating to the transfer of the Ophthalmic Product.

      12.4    EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL. Expiration or
              termination of this Agreement shall not relieve the Parties of any
              obligation accruing prior to such expiration or termination. Any
              expiration or termination of this Agreement shall be without
              prejudice to the rights of either Party against the other accrued
              or accruing under this Agreement prior to expiration or
              termination, including without limitation the obligation to pay
              royalties for Ophthalmic Products sold prior to such expiration or
              termination. The provisions of Articles 9, 11, 13 and Sections
              2.12.1 (as it relates to the orderly cessation of Development
              activities), 10.5, 12.2.2, 12.3.1 and 12.4 shall survive any
              expiration or termination of this Agreement. Except as set forth
              in this Article 12, upon termination or expiration of this
              Agreement all other rights and obligations cease.

      13.     MISCELLANEOUS

      13.1    FORCE MAJEURE. Neither Party shall be held liable to the other
              Party nor be deemed to have defaulted under or breached this
              Agreement for failure or delay in performing any obligation under
              this Agreement to the extent that such failure or delay is caused
              by or results from causes beyond the reasonable control of the
              affected Party, potentially including without limitation
              embargoes, war, acts of war (whether war be declared or not),
              insurrections, riots, civil commotions, strikes, lockouts or other
              labor disturbances, fire, floods, or other acts of God, or acts,
              omissions or delays in acting by any governmental authority or the
              other Party. The affected Party shall notify the other Party of
              such force majeure circumstances as soon as reasonably practical,
              and shall promptly undertake all reasonable efforts necessary to
              cure such force majeure circumstances.

      13.2    ASSIGNMENT/CHANGE OF CONTROL.

      13.2.1  ASSIGNMENT. Except as provided in this Section 13.2, this
              Agreement may not be assigned or otherwise transferred, nor may
              any right or obligation hereunder be assigned or transferred, by
              either Party without the consent of the other Party. Either Party
              may, without the other Party's consent, assign this Agreement and
              its rights and obligations hereunder in whole or in part to an
              Affiliate. In any event, the assigning Party shall remain
              responsible for the performance by its Affiliate of this Agreement
              or any obligations hereunder so assigned to such Affiliate, and
              such assignment shall terminate, and all rights so assigned shall
              revert to the assigning Party, if and when such


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               Affiliate ceases to be an Affiliate of the assigning Party.
               Furthermore, in connection with a Change of Control (as
               defined below) of a Party, such Party may assign this
               Agreement and its rights and obligations hereunder in whole to
               the surviving entity or acquiror upon ninety (90) days' prior
               written notification to the other Party. Any attempted
               assignment not in accordance with this Section 13.2.1 shall be
               void.

      13.2.2   CHANGE OF CONTROL. In the event of a Change of Control of a
               Party, such Party (the "Acquired Party") shall provide prompt
               written notice to the other Party (the "Non-Acquired Party") of
               the effective date of such Change of Control ("Change of Control
               Notice").

      13.2.2.1 For each Profit-Sharing Product [**], the Non-Acquired Party may
               elect, by written notice to the Acquired Party within [**] after
               receipt of the Change of Control Notice, [**], such
               Profit-Sharing Product shall be deemed [**] [**] with respect to
               such Royalty-Bearing Product; provided, however, that (a)
               [**]such Royalty-Bearing Product shall be [**], (b) [**],
               calculated as set forth in Sections 8.1.3.2 and 8.3.2.3,
               respectively, in each case [**], then for the [**].

      13.2.2.2 For each Profit-Sharing Product [**] as of the effective date of
               the Change of Control:

              (a)   In the Territory outside of the United States, MERCK shall
                    retain the right to Develop, Manufacture and Commercialize
                    such Profit-Sharing Product and the obligation to pay
                    royalties with respect thereto to ALNYLAM pursuant to
                    Section 8.3.1.

              (b)   In the United States, the Non-Acquired Party may [**] after
                    receipt of the Change of Control Notice, [**]. If the
                    Non-Acquired Party [**], the provisions of Section 4.4.2
                    will apply to such Royalty-Bearing Product and [**] with
                    respect to such Royalty-Bearing Product; provided, however,
                    that (a) [**] such Royalty-Bearing Product shall be [**],
                    and (b) the Acquired Party shall [**]; (ii) [**] with
                    respect to such Royalty-Bearing Product; and (iii) royalties
                    on Net Sales of such Royalty-Bearing Product calculated as
                    set forth in Section 8.3.2.1, with the following values:

                    (A)   The Sublicense Revenue Fraction shall be [**] percent
                          ([**]%);

                    (B)   Royalty Rate One shall be [**] percent ([**]%);

                    (C)   Royalty Rate Two shall be [**] percent ([**]%);

                    (D)   Royalty Rate Three shall be [**] percent ([**]%); and

                    (E)   Royalty Rate Four shall be [**] percent ([**]%).


                                       69
<PAGE>
               13.2.2.3 For each Profit-Sharing Product with respect to which an
               NDA has been filed:

              (a)   In the Territory outside of the United States, MERCK shall
                    retain the right to Develop, Manufacture and Commercialize
                    such Profit-Sharing Product and the obligation to pay
                    royalties with respect thereto to ALNYLAM pursuant to
                    Section 8.3.1.

              (b)   In the United States, the Non-Acquired Party may elect, by
                    written notice to the Acquired Party within thirty (30) days
                    after receipt of the Change of Control Notice, to change the
                    Commercialization arrangements for such Profit-Sharing
                    Product such that [**]. If the Non-Acquired Party does not
                    so elect within such period, the Commercialization
                    arrangements between the Parties in existence in the United
                    States for such Profit-Sharing Product on the effective date
                    of the Change of Control shall continue.

              (c)   If the Non-Acquired Party elects to change the
                    Commercialization arrangements between the Parties within
                    the United States for such Profit-Sharing Product as set
                    forth in clause (b) above, such change will be implemented
                    during a transition period not to exceed [**] after the date
                    of such election and the Parties will cooperate to ensure
                    the orderly implementation of such transition. Furthermore,
                    the Party receiving sole Commercialization rights (the "Sole
                    Commercialization Party") shall pay to the other Party (the
                    "Divesting Party") in respect of such Profit-Sharing
                    Product, [**] shall be reported and paid on a quarterly
                    basis. Each quarterly report of [**] provided to the
                    Divesting Party shall include information about Net Sales of
                    the Profit-Sharing Product comparable to the information
                    specified for royalty reports in Section 8.3.8, and shall
                    also include information in summary form concerning the
                    Commercialization Expenses deducted from Net Sales of such
                    Profit-Sharing Product to calculate [**] during the
                    applicable Calendar Quarter. Quarterly reports shall be due
                    no later than the twenty-fifth (25th) day following the
                    close of each Calendar Quarter. If the Divesting Party
                    believes in good faith that [**] the Parties shall discuss
                    the Divesting Party's concerns and the Sole
                    Commercialization Party shall consider the Divesting Party's
                    concerns in good faith.

               13.2.2.4 For purposes of this Section 13.2.2, a "CHANGE OF
               CONTROL" of a Party shall be deemed to occur if such Party is
               involved in a merger, reorganization or consolidation in which
               its shareholders immediately prior to such transaction would hold
               fifty percent (50%) or less of the securities or other ownership
               or voting interests representing the equity of the surviving
               entity immediately after such merger, reorganization or
               consolidation, or if there is a sale of all or substantially all
               of such Party's assets or business relating to this Agreement, or
               if a "Significant Pharmaceutical Company" (as defined below)
               effectively acquires control of the management and policies of
               such Party. A "Significant Pharmaceutical Company" is a
               pharmaceutical company, biotechnology company, or group of such
               companies acting in concert, with annual sales of human
               pharmaceutical products greater than [**] U.S. dollars ($[**]).


                                       70
<PAGE>
      13.3  SEVERABILITY. If any one or more of the provisions contained in this
            Agreement is held invalid, illegal or unenforceable in any respect,
            the validity, legality and enforceability of the remaining
            provisions contained herein shall not in any way be affected or
            impaired thereby, unless the absence of the invalidated provision(s)
            adversely affects the substantive rights of the Parties. The Parties
            shall in such an instance use their best efforts to replace the
            invalid, illegal or unenforceable provision(s) with valid, legal and
            enforceable provision(s) which, insofar as practical, implement the
            purposes of this Agreement.

      13.4  NOTICES. All notices which are required or permitted hereunder shall
            be in writing and sufficient if delivered personally, sent by
            facsimile (and promptly confirmed by personal delivery, registered
            or certified mail or overnight courier), sent by
            nationally-recognized overnight courier or sent by registered or
            certified mail, postage prepaid, return receipt requested, addressed
            as follows:

             If to ALNYLAM, to:        ALNYLAM PHARMACEUTICALS, INC.
                                       300 Third Street
                                       Cambridge, MA  02142
                                       Attention: Chief Executive Officer
                                       Facsimile No.: (617) 551-8101

                      and:             FABER DAEUFER & ROSENBERG, P.C.
                                       One Broadway, 14th Floor
                                       Cambridge, MA  02142
                                       Attention:  Sumy Daeufer
                                       Facsimile No.:  (617) 507-5858

             If to MERCK, to:          MERCK & CO., INC.
                                       One Merck Drive
                                       P.O. Box 100, WS3A-65
                                       Whitehouse Station, NJ 08889-0100
                                       Attention: Office of Secretary
                                       Facsimile No.: (908) 735-1246

                      and:             MERCK & CO., INC.
                                       One Merck Drive
                                       P.O. Box 100, WS2A-30
                                       Whitehouse Station, NJ 08889-0100
                                       Attention: Chief Licensing Officer
                                       Facsimile: (908) 735-1214

            or to such other address as the Party to whom notice is to be given
            may have furnished to the other Party in writing in accordance
            herewith. Any such notice shall be deemed to have been given: (a)
            when delivered if personally delivered or sent by facsimile on a
            business day (or if delivered or sent on a non-business day, then on
            the next business day); (b) on receipt if sent by
            nationally-recognized overnight courier; and/or (c) on receipt if
            sent by mail.


                                       71
<PAGE>
      13.5    APPLICABLE LAW. The Agreement shall be governed by and construed
              in accordance with the laws of the State of New York and the
              patent laws of the United States without reference to any rules of
              conflict of laws or renvoi.

      13.6    DISPUTE RESOLUTION.

      13.6.1  DISPUTES. The Parties shall negotiate in good faith and use
              reasonable efforts to settle any dispute, controversy or claim
              arising from, or related to, this Agreement or to the breach
              hereof (collectively, "Dispute"). In particular, the CEO of
              ALNYLAM and the Executive Vice President of Worldwide Basic
              Research for MERCK shall attempt to resolve all Disputes. In the
              event that the CEO and the Executive Vice President cannot reach
              an agreement regarding a Dispute, and a Party wishes to pursue the
              matter, each such Dispute that is not an "Excluded Claim" shall be
              finally resolved by binding arbitration in accordance with the
              Commercial Arbitration Rules and Supplementary Procedures for
              Large Complex Disputes of the American Arbitration Association
              ("AAA") and Section 13.6.2 below, and judgment on the arbitration
              award may be entered in any court having jurisdiction thereof. As
              used in this Section 13.6, the term "Excluded Claim" shall mean a
              dispute that concerns (a) the validity or infringement of a
              patent, trademark or copyright, or (b) any antitrust,
              anti-monopoly or competition law or regulation, whether or not
              statutory.

      13.6.2  ARBITRATION. The arbitration shall be conducted by a panel of
              three (3) persons experienced in the pharmaceutical business who
              are independent of both Parties and neutral with respect to the
              Dispute presented for arbitration. Within thirty (30) days after
              initiation of arbitration, each Party shall select one person to
              act as arbitrator and the two Party-selected arbitrators shall
              select a third arbitrator within thirty (30) days of their
              appointment. If the arbitrators selected by the Parties are unable
              or fail to agree upon the third arbitrator, the third arbitrator
              shall be appointed by the AAA. The place of arbitration shall be
              New York, New York, and all proceedings and communications shall
              be in English.

              Either Party may apply to the arbitrators for interim injunctive
              relief until the arbitration award is rendered or the controversy
              is otherwise resolved. Either Party also may, without waiving any
              remedy under this Agreement, seek from any court having
              jurisdiction any injunctive or provisional relief necessary to
              protect the rights or property of that Party pending the
              arbitration award. The arbitrators shall have no authority to
              award punitive or any other type of damages not measured by a
              Party's compensatory damages. Each Party shall bear its own costs
              and expenses and attorneys' fees, and the Party that does not
              prevail in the arbitration proceeding shall pay the arbitrators'
              and any administrative fees of arbitration. Except to the extent
              necessary to confirm an award or as may be required by law,
              neither a Party nor an arbitrator may disclose the existence,
              content, or results of an arbitration without the prior written
              consent of both Parties. In no event shall an arbitration be
              initiated after the date when commencement of a legal or equitable
              proceeding based on the dispute, controversy or claim would be
              barred by the applicable New York statute of limitations.

                                       72
<PAGE>
            (a)   The Parties agree that, in the event of a Dispute over the
                  nature or quality of performance under this Agreement, neither
                  Party may terminate this Agreement until final resolution of
                  the Dispute through arbitration or other judicial
                  determination. The Parties further agree that any payments
                  made pursuant to this Agreement pending resolution of the
                  Dispute shall be refunded promptly if an arbitrator or court
                  determines that such payments are not due.

            (b)   The Parties hereby agree that any disputed performance or
                  suspended performances pending the resolution of the
                  arbitration that the arbitrator determines to be required to
                  be performed by a Party must be completed within a reasonable
                  time period following the final decision of the arbitrator.

            (c)   The Parties hereby agree that any monetary payment to be made
                  by a Party pursuant to a decision of the arbitrator shall be
                  made in United States dollars, free of any tax or other
                  deduction. The Parties further agree that the decision of the
                  arbitrator shall be the sole, exclusive and binding remedy
                  between them regarding determination of the matters presented
                  to the arbitrator.

      13.7  ENTIRE AGREEMENT; AMENDMENTS. The Agreement contains the entire
            understanding of the Parties with respect to the Ophthalmic
            Collaboration and licenses granted hereunder. All express or implied
            agreements and understandings, either oral or written, with regard
            to the Ophthalmic Collaboration and the licenses granted hereunder
            are superseded by the terms of this Agreement. This Agreement
            (including the Schedules hereto) may be amended, or any term hereof
            modified, only by a written instrument duly-executed by authorized
            representatives of both Parties hereto.

      13.8  HEADINGS. The captions to the Articles and Sections hereof are not a
            part of this Agreement, but are merely for convenience to assist in
            locating and reading the several Articles and Sections hereof.

      13.9  INDEPENDENT CONTRACTORS. It is expressly agreed that ALNYLAM and
            MERCK shall be independent contractors and that the relationship
            between ALNYLAM and MERCK shall not constitute a partnership, joint
            venture or agency. ALNYLAM shall not have the authority to make any
            statements, representations or commitments of any kind, or to take
            any action, which shall be binding on MERCK, without the prior
            written consent of MERCK, and MERCK shall not have the authority to
            make any statements, representations or commitments of any kind, or
            to take any action, which shall be binding on ALNYLAM without the
            prior written consent of ALNYLAM.

      13.10 WAIVER. The waiver by either Party hereto of any right hereunder, or
            of the failure of the other Party to perform, or of a breach by the
            other Party, shall not be deemed a waiver of any other right
            hereunder or of any other breach or failure by such other Party,
            whether of a similar nature or otherwise.

      13.11 CUMULATIVE REMEDIES. No remedy referred to in this Agreement is
            intended to be exclusive, but each shall be cumulative and in
            addition to any other remedy referred to in this Agreement or
            otherwise available under law.


                                       73
<PAGE>
      13.12 WAIVER OF RULE OF CONSTRUCTION. Each Party has had the opportunity
            to consult with counsel in connection with the review, drafting and
            negotiation of this Agreement. Accordingly, the rule of construction
            that any ambiguity in this Agreement shall be construed against the
            drafting Party shall not apply.

      13.13 COUNTERPARTS. The Agreement may be executed in two or more
            counterparts, each of which shall be deemed an original, but all of
            which together shall constitute one and the same instrument.

      13.14 LIMITATION OF LIABILITY. NEITHER PARTY HERETO WILL BE LIABLE FOR
            SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES ARISING OUT
            OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING
            LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS
            AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES, EXCEPT AS A
            RESULT OF A PARTY'S WILLFUL MISCONDUCT OR A MATERIAL BREACH OF THE
            CONFIDENTIALITY AND NON-USE OBLIGATIONS IN ARTICLE 9. NOTHING IN
            THIS SECTION 13.14 IS INTENDED TO LIMIT OR RESTRICT THE
            INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY.

      13.15 BINDING EFFECT. As of the Effective Date, this Agreement shall be
            binding upon and inure to the benefit of the Parties and their
            respective permitted successors and permitted assigns.

      13.16 NO THIRD PARTY BENEFICIARIES. Except as expressly contemplated
            herein, no Third Party, including any employee of any Party to this
            Agreement, shall have or acquire any rights by reason of this
            Agreement.

         [THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]


                                       74
<PAGE>
      IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.

    MERCK & CO., INC.                           ALNYLAM PHARMACEUTICALS, INC.


      BY:   /s/Raymond V. Gilmartin             BY:   /s/ John Maraganore
         ---------------------------------         ----------------------------

      NAME: Raymond V. Gilmartin                NAME:  John Maraganore
            ------------------------------             ------------------------

      TITLE:  Chairman, President and CEO       TITLE:  President & CEO
            ------------------------------              -----------------------

      DATE:   6/27/04                           DATE:  6/29/04
              ----------------------------             ------------------------


                                       75
<PAGE>
                                  SCHEDULE 1.6
                              ALNYLAM PATENT RIGHTS


         1.6.1         [**]
                       [**]
         1.6.2         [**]
                       [**]



                                       76
<PAGE>
                                   TABLE 1.6.1

                PATENTS AND PATENT APPLICATIONS OWNED BY ALNYLAM
OR LICENSED BY ALNYLAM FROM THIRD PARTIES OTHER THAN ISIS PHARMACEUTICALS, INC.

<TABLE>
<CAPTION>
                    Filing
       Case No.      Date       Country       Serial No.     Status      Title
       --------      ----       -------       ----------     ------      -----
<S>                 <C>         <C>           <C>            <C>          <C>
         [**]        [**]        [**]            [**]         [**]        [**]
</TABLE>


                                       77
<PAGE>
                                  SCHEDULE 1.30

                          EXISTING ALNYLAM IN-LICENSES

Existing ALNYLAM In-Licenses shall include the following Third Party agreements:

1.    [**].

2.    [**].


                                       78
<PAGE>
                                  SCHEDULE 2.2

                              VEGF PROGRAM WORKPLAN



The work plan for the VEGF program [**]

[**]

[**]

[**]

[**]

[**]

[**]

VEGF Program Budget Overview (TO END of [**])

<TABLE>
<S>                                                                   <C>
         Full-time Merck Employees:                                   [**] FTE
         Full-Time Alnylam Employees:                                 [**] FTE

         TOTAL VEGF Program FTE:                                      [**] FTE

         Biology (Merck)                                              [**] FTE
                  [**]
                  [**]

         Biology (Alnylam)                                            [**] FTE
                  [**]
                  [**]
                  [**]

         Chemistry (Alnylam)                                          [**] FTE
                  [**]
                  [**]
                  [**]
                  [**]

         Program Management (Alnylam)                                 [**] FTE
         Program Management (Merck)                                   [**] FTE
</TABLE>


                                       79
<PAGE>
<TABLE>
<S>                                                              <C>
         External costs:                                         $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]

         Consultants
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**]
         [**]                                                    $[**] [Terms to be
                                                                 driven by workplan]
         [**]                                                    $[**]
</TABLE>

These figures are current estimates of costs through calendar year [**] based on
a preliminary work plan. FTE may be added at a later date as needed [**].
Separate budget proposals will cover [**].


                                       80
<PAGE>
Other Ocular Programs

[**]
[**]


                                       81
<PAGE>
VEGF Research Timeline

[Graphic showing research timeline.]


                                       82
<PAGE>
                                  SCHEDULE 2.3

                               OPHTHALMIC PRODUCTS

ALNYLAM:  The ALNYLAM duplexes numbered [**], inclusive.

MERCK: None.


                                       83
<PAGE>
                                  SCHEDULE 5.5

                                U.S. CO-PROMOTION
                                AGREEMENT TERMS

Commercialization:

      -     ALNYLAM shall co-promote the Profit-Sharing Product in the United
            States by [**]. The costs of ALNYLAM's co-promotion efforts
            (consistent with the Commercialization Plan) shall be included in
            Commercialization Expenses for purposes of calculating U.S.
            Operating Profit/Loss.

      -     ALNYLAM shall [**] to support such Profit-Sharing Product in the
            United States as set forth in the definitive Co-Promotion Agreement
            relating to such Profit-Sharing Product that is executed by the
            Parties pursuant to Section 5.5 of this Agreement. In the event that
            [**] at the time of launch of such Profit-Sharing Product in the
            United States, the Parties[**] following the launch of such
            Profit-Sharing Product in the United States. MERCK will [**],
            ALNYLAM shall [**].

      -     ALNYLAM's U.S. Co-Promotion activity shall be fully integrated into
            MERCK's U.S. promotion effort for such Profit-Sharing Product.

      -     The Co-Promotion Agreement will also contain, without limitation,
            provisions with respect to the following matters: [**].


                                       84
<PAGE>
                                   SCHEDULE 10

                  EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES

Section 10.2.3:

[**]
[**]


                                       85